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EX-12 - EX-12 - ERP OPERATING LTD PARTNERSHIP | c63161exv12.htm |
EX-21 - EX-21 - ERP OPERATING LTD PARTNERSHIP | c63161exv21.htm |
EX-32.2 - EX-32.2 - ERP OPERATING LTD PARTNERSHIP | c63161exv32w2.htm |
EX-31.2 - EX-31.2 - ERP OPERATING LTD PARTNERSHIP | c63161exv31w2.htm |
EX-31.1 - EX-31.1 - ERP OPERATING LTD PARTNERSHIP | c63161exv31w1.htm |
EX-23.1 - EX-23.1 - ERP OPERATING LTD PARTNERSHIP | c63161exv23w1.htm |
EX-32.1 - EX-32.1 - ERP OPERATING LTD PARTNERSHIP | c63161exv32w1.htm |
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Fiscal Year Ended DECEMBER 31, 2010
OR
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______________ to _______________
Commission File Number: 0-24920
ERP OPERATING LIMITED PARTNERSHIP
(Exact Name of Registrant as Specified in Its Charter)
Illinois (State or Other Jurisdiction of Incorporation or Organization) |
36-3894853 (I.R.S. Employer Identification No.) |
|
Two North Riverside Plaza, Chicago, Illinois (Address of Principal Executive Offices) |
60606 (Zip Code) |
(312) 474-1300
(Registrants Telephone Number, Including Area Code)
(Registrants Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
7.57% Notes due August 15, 2026 | New York Stock Exchange | |
(Title of Each Class) | (Name of Each Exchange on Which Registered) |
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of Each Class)
(Title of Each Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act. Yes þ No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes o
No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
(§229.405 of this chapter) is not contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes o No þ
Table of Contents
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates by reference certain information to be contained in Equity Residentials
Proxy Statement relating to its 2011 Annual Meeting of Shareholders, which Equity Residential
intends to file no later than 120 days after the end of its fiscal year ended December 31, 2010.
Equity Residential is the general partner and 95.5% owner of ERP Operating Limited Partnership.
2
ERP OPERATING LIMITED PARTNERSHIP
TABLE OF CONTENTS
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EX-32.2 |
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Table of Contents
PART I
Item 1. Business
General
ERP Operating Limited Partnership (ERPOP), an Illinois limited partnership, was formed in
May 1993 to conduct the multifamily residential property business of Equity Residential (EQR).
EQR, a Maryland real estate investment trust (REIT) formed in March 1993, is an S&P 500 company
focused on the acquisition, development and management of high quality apartment properties in top
United States growth markets. EQR has elected to be taxed as a REIT.
EQR is one of the largest publicly traded real estate companies and is the largest publicly
traded owner of multifamily properties in the United States (based on the aggregate market value of
its outstanding Common Shares, the number of apartment units wholly owned and total revenues
earned). The Operating Partnerships corporate headquarters are located in Chicago, Illinois and
the Operating Partnership also operates property management offices
in each of its markets.
EQR is the
general partner of, and as of December 31, 2010 owned an approximate 95.5%
ownership interest in ERPOP. All of EQRs property ownership,
development and related business operations are conducted through ERPOP and its
subsidiaries. References to the Operating Partnership include ERPOP and those entities owned or
controlled by it. References to the Company mean EQR and the Operating Partnership.
As of December 31, 2010, the Operating Partnership, directly or indirectly through investments
in title holding entities, owned all or a portion of 451 properties located in 17 states and the
District of Columbia consisting of 129,604 apartment units. The ownership breakdown includes (table
does not include various uncompleted development properties):
Properties | Apartment Units | |||||||
Wholly Owned Properties |
425 | 119,634 | ||||||
Partially Owned Properties Consolidated |
24 | 5,232 | ||||||
Military Housing |
2 | 4,738 | ||||||
451 | 129,604 |
As
of December 31, 2010, the Operating Partnership had approximately 4,000 employees who
provided real estate operations, leasing, legal, financial, accounting, acquisition, disposition,
development and other support functions.
Certain capitalized terms used herein are defined in the Notes to Consolidated Financial
Statements. See also Note 19 in the Notes to Consolidated Financial Statements for additional
discussion regarding the Operating Partnerships segment disclosures.
Available Information
You may access our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current
Reports on Form 8-K and any amendments to any of those reports we file with the SEC free of charge
at our website, www.equityresidential.com. These reports are made available at our website
as soon as reasonably practicable after we file them with the SEC.
Business Objectives and Operating and Investing Strategies
The Operating Partnership invests in apartment communities located in strategically targeted
markets with the goal of maximizing our risk adjusted total return
(operating income plus capital
appreciation) on invested capital.
Our operating focus is on balancing occupancy and rental rates to maximize our revenue while
exercising tight cost control to generate the highest possible return to our shareholders. Revenue is maximized
by driving qualified resident prospects to our properties,
converting this traffic cost-effectively
into new leases at the highest rent possible, keeping our residents satisfied and renewing their
leases at yet higher rents.
While we believe that it is our high-quality, well-located assets that bring our customers to us, it is our
customer service that keeps them renting with us and recommending us to their friends.
We use technology to engage our customers in the way that they want to be engaged. Many of
our residents utilize our web-based resident portal which allows them to review their account and make payments, provide feedback and make
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service requests on-line.
We seek to maximize capital appreciation of our properties by investing in markets that are
characterized by conditions favorable to multifamily property appreciation. These markets generally feature one or more of the following:
| High barriers to entry where, because of land scarcity or government regulation, it is difficult or costly to build new apartment properties leading to low supply; | ||
| High single family home prices making our apartments a more economical housing choice; | ||
| Strong economic growth leading to household formation and job growth, which in turn leads to high demand for our apartments; and | ||
| An attractive quality of life leading to high demand and retention and allowing us to more readily increase rents. |
Acquisitions and developments may be financed from various sources of capital, which may
include retained cash flow, issuance of additional equity and debt securities, sales of properties,
joint venture agreements and collateralized and uncollateralized borrowings. In addition, the
Operating Partnership may acquire properties in transactions that include the issuance of limited
partnership interests in the Operating Partnership (OP Units) as consideration for the acquired
properties. Such transactions may, in certain circumstances, enable the sellers to defer, in whole
or in part, the recognition of taxable income or gain that might otherwise result from the sales.
ERPOP may also acquire land parcels to hold and/or sell based on market opportunities. The
Operating Partnership may also seek to acquire properties by purchasing defaulted or distressed
debt that encumbers desirable properties in the hope of obtaining title to property through
foreclosure or deed-in-lieu of foreclosure proceedings. The Operating Partnership has also, in the
past, converted some of its properties and sold them as condominiums but is not currently active in
this line of business.
The Operating Partnership primarily sources the funds for its new property acquisitions in its
core markets with the sales proceeds from selling assets that are
older or located in non-core
markets. During the last five years, the Operating Partnership has sold over 97,000 apartment
units for an aggregate sales price of $7.2 billion and acquired
nearly 25,000 apartment units in its core markets for
approximately $5.5 billion.
We are currently acquiring and developing assets primarily in the following targeted metropolitan areas: Boston,
New York, Washington DC, South
Florida, Southern California, San Francisco, Seattle and to a
lesser extent Denver. We also have investments (in the
aggregate about 18% of our NOI) in other markets including Atlanta, Phoenix, Portland, Oregon,
New England excluding Boston, Tampa, Orlando and Jacksonville but do not intend to
acquire or develop assets
in these markets.
As part of its strategy, the Operating Partnership purchases completed and fully occupied
apartment properties, partially completed or partially unoccupied properties or land on which
apartment properties can be constructed. We intend to hold a
diversified portfolio of assets across
our target markets. Currently, no single metropolitan area accounts for more than 17% of our NOI,
though no guarantee can be made that NOI concentration may not increase in the future.
We endeavor to
attract and
retain the best employees by providing them with the
education, resources and opportunities to succeed. We provide many
classroom and on-line training
courses to assist our employees in interacting with prospects and residents as well as extensively
train our customer service specialists in maintaining the equipment and appliances on our
property sites. We actively promote from within and many senior corporate and property leaders
have risen from entry level or junior positions. We monitor our employees engagement by surveying
them annually and have consistently received high engagement scores.
We have a commitment to sustainability and consider the environmental impacts of our business
activities. With its high density, multifamily housing is, by its nature, an environmentally
friendly property type.
Our recent acquisition and development activities have been primarily
concentrated in pedestrian-friendly urban locations near
public transportation.
When developing and renovating our properties, we strive to reduce energy
and water usage by investing in energy saving technology while positively impacting the experience
of our residents and the value of our assets. We continue to implement a combination of
irrigation, lighting and HVAC improvements at our properties that will reduce energy
and water consumption.
Debt and Equity Activity
Please refer to Item 7, Managements Discussion and Analysis of Financial Condition and
Results of Operations, for the Operating Partnerships Capital Structure chart as of December 31,
2010.
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Major Debt and Equity Activities for the Years Ended December 31, 2010, 2009 and 2008
During 2010:
| The Operating Partnership issued $600.0 million of ten-year 4.75% fixed rate public notes in a public offering at an all-in effective interest rate of 5.09%, receiving net proceeds of $595.4 million before underwriting fees and other expenses. | ||
| EQR issued 2,506,645 Common Shares pursuant to its Share Incentive Plans and received net proceeds of approximately $71.6 million. | ||
| EQR issued 157,363 Common Shares pursuant to its Employee Share Purchase Plan and received net proceeds of approximately $5.1 million. | ||
| EQR issued 6,151,198 Common Shares at an average price of $47.45 per share for total consideration of $291.9 million pursuant to its At-The-Market (ATM) share offering program. See Note 3 in the Notes to Consolidated Financial Statements for further discussion. | ||
| EQR repurchased and retired 58,130 of its Common Shares at an average price of $32.46 per share for total consideration of $1.9 million (all related to the vesting of employee restricted shares). See Note 3 in the Notes to Consolidated Financial Statements for further discussion. |
During 2009:
| The Operating Partnership obtained $500.0 million of mortgage loan proceeds through the issuance of an 11 year (stated maturity date of July 1, 2020) cross-collateralized loan with an all-in fixed interest rate for 10 years at approximately 5.6% secured by 13 properties. | ||
| EQR issued 422,713 Common Shares pursuant to its Share Incentive Plans and received net proceeds of approximately $9.1 million. | ||
| EQR issued 324,394 Common Shares pursuant to its Employee Share Purchase Plan and received net proceeds of approximately $5.3 million. | ||
| EQR issued 3,497,300 Common Shares at an average price of $35.38 per share for total consideration of $123.7 million pursuant to its ATM share offering program. See Note 3 in the Notes to Consolidated Financial Statements for further discussion. | ||
| EQR repurchased and retired 47,450 of its Common Shares at an average price of $23.69 per share for total consideration of $1.1 million (all related to the vesting of employee restricted shares). See Note 3 in the Notes to Consolidated Financial Statements for further discussion. | ||
| The Operating Partnership repurchased $75.8 million of its 5.20% fixed rate tax-exempt notes. | ||
| The Operating Partnership repurchased at par $105.2 million of its 4.75% fixed rate public notes due June 15, 2009. In addition, the Operating Partnership repaid the remaining $122.2 million of its 4.75% fixed rate public notes at maturity. See Note 9 in the Notes to Consolidated Financial Statements for further discussion. | ||
| The Operating Partnership repurchased $185.2 million at par and $21.7 million at a price of 106% of par of its 6.95% fixed rate public notes due March 2, 2011. See Note 9 in the Notes to Consolidated Financial Statements for further discussion. | ||
| The Operating Partnership repurchased $146.1 million of its 6.625% fixed rate public notes due March 15, 2012 at a price of 108% of par. See Note 9 in the Notes to Consolidated Financial Statements for further discussion. | ||
| The Operating Partnership repurchased $127.9 million of its 5.50% fixed rate public notes due October 1, 2012 at a price of 107% of par. See Note 9 in the Notes to Consolidated Financial Statements for further discussion. | ||
| The Operating Partnership repurchased $17.5 million of its 3.85% convertible fixed rate public notes due August 15, 2026 (putable in 2011) at a price of 88.4% of par. In addition, the Operating Partnership repurchased $48.5 million of these notes at par. See Note 9 in the Notes to Consolidated Financial Statements for further discussion. |
During 2008:
| The Operating Partnership obtained $500.0 million of mortgage loan proceeds through the issuance of an 11.5 year (stated maturity date of October 1, 2019) cross-collateralized loan with a fixed stated interest rate for 10.5 years at 5.19% secured by 13 properties. | ||
| The Operating Partnership obtained $550.0 million of mortgage loan proceeds through the issuance of an 11.5 year (stated maturity date of March 1, 2020) cross-collateralized loan with a fixed stated interest rate for 10.5 years at approximately 6% secured by 15 properties. | ||
| The Operating Partnership obtained $543.0 million of mortgage loan proceeds through the issuance of an 8 |
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year (stated maturity date of January 1, 2017) cross-collateralized loan with a fixed stated interest rate for 7 years at approximately 6% secured by 18 properties. | |||
| EQR issued 995,129 Common Shares pursuant to its Share Incentive Plans and received net proceeds of approximately $24.6 million. | ||
| EQR issued 195,961 Common Shares pursuant to its Employee Share Purchase Plan and received net proceeds of approximately $6.2 million. | ||
| EQR repurchased and retired 220,085 of its Common Shares at an average price of $35.93 per share for total consideration of $7.9 million. See Note 3 in the Notes to Consolidated Financial Statements for further discussion. | ||
| The Operating Partnership repurchased $72.6 million of its 4.75% fixed rate public notes due June 15, 2009 at a price of 99.0% of par. See Note 9 in the Notes to Consolidated Financial Statements for further discussion. | ||
| The Operating Partnership repurchased $101.4 million of its 3.85% convertible fixed rate public notes due August 15, 2026 (putable in 2011) at a price of 82.3% of par. See Note 9 in the Notes to Consolidated Financial Statements for further discussion. |
EQR contributed all of the net proceeds of the above equity offerings to the Operating
Partnership in exchange for OP Units or preference units.
During the first quarter of 2011 through January 13, 2011, EQR has issued approximately 3.0
million Common Shares at an average price of $50.84 per share for total consideration of
approximately $154.5 million through the ATM share offering program. EQR has not issued any shares
under this program since January 13, 2011.
An unlimited amount of equity and debt securities remains available for issuance by EQR and
the Operating Partnership under effective shelf registration statements filed with the SEC. Most
recently, EQR and the Operating Partnership filed a universal shelf registration statement for an
unlimited amount of equity and debt securities that became automatically effective upon filing with
the SEC in October 2010 (under SEC regulations enacted in 2005, the registration statement
automatically expires on October 14, 2013 and does not contain a maximum issuance amount).
However, as of February 16, 2011, issuances under the ATM share offering program are limited to
10,000,000 additional shares. Per the terms of ERPOPs partnership agreement, EQR
contributes the net proceeds of all equity offerings to the capital of the Operating Partnership in
exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis) or preference
units (on a one-for-one preferred share per preference unit basis).
Credit Facilities
The Operating Partnership has a $1.425 billion (net of $75.0 million which had been committed
by a now bankrupt financial institution and is not available for borrowing) unsecured revolving
credit facility maturing on February 28, 2012, with the ability to increase available borrowings by
an additional $500.0 million by adding additional banks to the facility or obtaining the agreement
of existing banks to increase their commitments. Advances under the credit facility bear interest
at variable rates based upon LIBOR at various interest periods plus a spread (currently 0.50%)
dependent upon the Operating Partnerships credit rating or based on bids received from the lending
group. EQR has guaranteed the Operating Partnerships credit facility up to the maximum amount and
for the full term of the facility.
As of December 31, 2010, the amount available on the credit facility was $1.28 billion (net of
$147.3 million which was restricted/dedicated to support letters of credit and net of the $75.0
million discussed above) and there was no amount outstanding. During the year ended December 31,
2010, the weighted average interest rate was 0.66%. As of December 31, 2009, the amount available
on the credit facility was $1.37 billion (net of $56.7 million which was restricted/dedicated to
support letters of credit and net of the $75.0 million discussed above). The Operating Partnership
did not draw and had no balance outstanding on its revolving credit facility at any time during the
year ended December 31, 2009.
Competition
All of the Operating Partnerships properties are located in developed areas that include
other multifamily properties. The number of competitive multifamily properties in a particular area
could have a material effect on the Operating Partnerships ability to lease apartment units at the
properties or at any newly acquired properties and on the rents charged. The Operating Partnership
may be competing with other entities that have greater resources than the
Operating Partnership and whose managers have more experience than the Operating Partnerships
managers. In addition, other forms of rental properties and single family housing provide housing
alternatives to potential residents of multifamily properties. See Item 1A. Risk Factors for
additional information with respect to competition.
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Environmental Considerations
See Item 1A. Risk Factors for information concerning the potential effects of environmental
regulations on our operations.
Item 1A. Risk Factors
General
The following Risk Factors may contain defined terms that are different from those used in the
other sections of this report. Unless otherwise indicated, when used in this section, the terms
we and us refer to ERP Operating Limited Partnership, an Illinois limited partnership, and its
subsidiaries. ERP Operating Limited Partnership is controlled by its general partner, Equity
Residential, a Maryland real estate investment trust. This Item 1A. includes forward-looking
statements. You should refer to our discussion of the qualifications and limitations on
forward-looking statements included in Item 7.
The occurrence of the events discussed in the following risk factors could adversely affect,
possibly in a material manner, our business, financial condition or results of operations, which
could adversely affect the value of our preference units, units of limited partnership
interest (OP Units) and Long-Term Incentive Plan Units (LTIP Units) of ERP Operating Limited
Partnership. In this section, we refer to the preference units, OP Units and LTIP Units together as our
securities and the investors who own Units and/or OP/LTIP Units as our security holders.
Our Performance and Securities Value are Subject to Risks Associated with the Real Estate Industry
General
Real property investments are subject to varying degrees of risk and are relatively illiquid.
Numerous factors may adversely affect the economic performance and value of our properties
and the ability to realize that value. These
factors include changes in the global, national, regional and local economic climates, local conditions
such as an oversupply of multifamily properties or a reduction in demand for our multifamily
properties, the attractiveness of our properties to residents, competition from other
multifamily properties and single family homes and changes in market rental rates. Our
performance also depends on our ability to collect rent from residents and to pay for adequate
maintenance, insurance and other operating costs, including real
estate taxes, all of which could increase
over time. Sources of labor and materials required for maintenance, repair, capital expenditure or
development may be more expensive than anticipated. Also, the expenses of owning and operating a
property are not necessarily reduced when circumstances such as market factors and competition
cause a reduction in income from the property.
We May Not Have Sufficient Cash Flows From Operations After Capital Expenditures to Cover Our Distributions and Our New Dividend Policy May Lead to Quicker Dividend Reductions |
We generally consider our cash flows provided by operating activities after capital
expenditures to be adequate to meet operating requirements and payment of distributions to our
security holders. However, there may be times when we experience shortfalls in our coverage of
distributions, which may cause us to consider reducing our distributions and/or using the proceeds
from property dispositions or additional financing transactions to make up the difference. Should
these shortfalls occur for lengthy periods of time or be material in nature, our financial
condition may be adversely affected and we may not be able to maintain our current distribution
levels. While our new dividend policy makes it less likely we will over distribute, it will also
lead to a dividend reduction more quickly than in the past should operating results deteriorate.
See Item 7 for additional discussion regarding our new dividend
policy.
We May Be Unable to Renew Leases or Relet Apartment Units as Leases Expire
When our residents decide not to renew their leases upon expiration, we may not be able to
relet their apartment units. Even if the residents do renew or we can relet the apartment units,
the terms of renewal or reletting may be less favorable than current lease terms. If we
are unable to promptly renew the leases or relet the apartment units, or if the rental rates upon
renewal or reletting are significantly lower than expected rates, then our results of operations
and financial condition will be adversely affected. Occupancy levels and market rents may be
adversely affected by
national and local economic and market conditions including, without limitation, new construction
and excess inventory of multifamily and single family housing, slow or negative employment growth,
availability of low interest mortgages for single family home buyers and the potential for
geopolitical instability, all of which are beyond
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the Operating Partnerships control. In addition,
various state and local municipalities are considering and may continue to consider rent control
legislation which could limit our ability to raise rents. Finally,
the federal governments policies, many of which may encourage
home ownership, can
increase competition and possibly limit our ability to raise rents. Consequently, our cash
flow and ability to service debt and make distributions to security holders could be reduced.
New Acquisitions and/or Development Projects May Fail to Perform as Expected and Competition for Acquisitions May Result in Increased Prices for Properties |
We intend to actively acquire and/or develop multifamily properties for rental operations as
market conditions dictate. We may also acquire multifamily properties that are unoccupied or in the early
stages of lease up. We may be unable to lease up these apartment properties on schedule, resulting
in decreases in expected rental revenues and/or lower yields due to lower occupancy and rates as
well as higher than expected concessions. We may underestimate the costs necessary to bring an
acquired property up to standards established for its intended market position or to complete a
development property. Additionally, we expect that other major real estate investors with
significant capital will compete with us for attractive investment opportunities or may also
develop properties in markets where we focus our development efforts. This competition (or lack
thereof) may increase (or depress) prices for multifamily properties. We may not be in a position or
have the opportunity in the future to make suitable property acquisitions on favorable terms.
The total number of development units, costs of development and estimated
completion dates are subject to uncertainties arising from changing economic conditions (such as
the cost of labor and construction materials), competition and local government regulation.
In connection with such government regulation, we may incur liability if our properties are
not constructed and operated in compliance with the accessibility provisions of the Americans with
Disabilities Act, the Fair Housing Act or other federal, state or local requirements. Noncompliance
could result in fines, subject us to lawsuits and require us to remediate or repair the
noncompliance.
Risks Involved in Real Estate Activity Through Joint Ventures
We have in the past and may in the future develop and acquire properties in joint ventures
with other persons or entities when we believe circumstances warrant the use of such structures.
Joint venture investments involve risks, including the possibility that our partners might refuse to make capital
contributions when due; that we may be responsible to our partner for indemnifiable losses; that
our partner might at any time have business or economic goals which are inconsistent with ours; and
that our partner may be in a position to take action or withhold consent contrary to our
instructions or requests. Frequently, we and our partner may each have the right to trigger a
buy-sell arrangement, which could cause us to sell our interest, or acquire our partners interest,
at a time when we otherwise would not have initiated such a transaction. In some instances, joint
venture partners may have competing interests in our markets that could create conflicts of
interest. Further, the Operating Partnerships joint venture partners may experience financial
distress and to the extent they do not meet their obligations to us or our joint ventures with
them, we may be adversely affected.
Because Real Estate Investments Are Illiquid, We May Not Be Able to Sell Properties When Appropriate |
Real estate investments generally cannot be sold quickly. We may not be able to reconfigure
our portfolio promptly in response to economic or other conditions.
This inability to reallocate our capital
promptly could adversely affect our financial
condition and ability to make distributions to our security holders.
The Value of Investment Securities Could Result In Losses to the Operating Partnership
From
time to time, the Operating Partnership holds investment securities
and/or cash investments that have a higher
risk profile than the government obligations and bond funds, money market funds or bank deposits in
which we generally invest. On occasion we may purchase securities of companies in our own industry
as a means to invest funds. There may be times when we experience declines in the value of these
investment securities, which may result in losses to the Operating Partnership and our financial
condition or results of operations could be adversely affected. Sometimes the cash we deposit at a
bank exceeds the FDIC insurance limit resulting in risk to the Operating Partnership of loss of
funds if these banks fail.
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Changes in Market Conditions and Volatility of Share Prices Could Adversely Affect the Market Price of EQRs Common Shares |
The stock markets, including the New York Stock Exchange, on which EQRs Common Shares are
listed, have experienced significant price and volume fluctuations. As a result, the market price
of EQRs Common Shares could be similarly volatile, and investors in EQRs Common Shares may
experience a decrease in the value of their shares, including decreases unrelated to our operating
performance or prospects. The market price of EQRs Common Shares may decline or fluctuate
significantly in response to many factors, including but not limited to the following:
| general market and economic conditions; | ||
| actual or anticipated variations in our quarterly operating results or dividends; | ||
| changes in our funds from operations, normalized funds from operations or earnings estimates; | ||
| difficulties or inability to access capital or extend or refinance debt; | ||
| decreasing (or uncertainty in) real estate valuations; | ||
| a change in analyst ratings; | ||
| adverse market reaction to any additional debt we incur in the future; | ||
| governmental regulatory action, including changes or proposed changes to the mandates of Fannie Mae or Freddie Mac, and changes in tax laws; and | ||
| the issuance of additional Common Shares, or the perception that such issuances might occur, including under EQRs ATM program. |
Changes in Laws and Litigation Risk Could Affect Our Business
We
are generally not able to pass through to our residents under
existing leases any real estate
or other federal, state or local taxes. Consequently, any such tax increases may adversely affect
our financial condition and limit our ability to make distributions to our security holders.
We may become involved in legal proceedings, including but not limited to, proceedings related
to consumer, employment, development, condominium conversion, tort
and commercial legal issues that, if decided adversely to or settled by us, could result in liability material to our financial
condition or results of operations.
Any Weaknesses Identified in Our Internal Control Over Financial Reporting Could Have an Adverse Effect on EQRs Share Price |
Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate and report on our
internal control over financial reporting. If we identify one or more material weaknesses in our
internal control over financial reporting, we could lose investor confidence in the accuracy and
completeness of our financial reports, which in turn could have an adverse effect on
EQRs share price.
Environmental Problems Are Possible and Can Be Costly
Federal, state and local laws and regulations relating to the protection of the environment
may require a current or previous owner or operator of real estate to investigate and clean up
hazardous or toxic substances or petroleum product releases at such property. The owner or operator
may have to pay a governmental entity or third parties for property damage and for investigation
and clean-up costs incurred by such parties in connection with the contamination. These laws
typically impose clean-up responsibility and liability without regard to whether the owner or
operator knew of or caused the presence of the contaminants. Even if more than one person may have
been responsible for the contamination, each person covered by the environmental laws may be held
responsible for all of the clean-up costs incurred. In addition, third parties may sue the owner or
operator of a site for damages and costs resulting from environmental contamination emanating from
that site.
Substantially all of our properties have been the subject of environmental assessments
completed by qualified independent environmental consulting companies. While these environmental
assessments have not revealed, nor are we aware of, any environmental liability that our management
believes would have a material adverse effect on our business, results of operations, financial
condition or liquidity, there can be no assurance that we will not incur such liabilities in the
future.
There have been an increasing number of lawsuits against owners
and managers of multifamily properties alleging personal injury and property damage caused by the
presence of mold in residential real estate. As some of these lawsuits have resulted in substantial
monetary judgments or settlements, insurance carriers have reacted by excluding mold-related claims
from standard policies and pricing mold endorsements at
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prohibitively high rates. While we have
adopted programs designed to minimize the existence of mold in any of our properties as well as
guidelines for promptly addressing and resolving reports of mold to minimize any impact mold might
have on our residents or the property, should mold become an issue in the future, our financial
condition or results of operations may be adversely affected.
We cannot be assured that existing environmental assessments of our properties reveal all
environmental liabilities, that any prior owner of any of our properties did not create a material
environmental condition not known to us, or that a material environmental condition does not
otherwise exist as to any of our properties.
Climate Change
To the extent that climate change does occur, we may experience extreme weather and changes in
precipitation and temperature, all of which may result in physical damage or a decrease in demand
for properties located in these areas or affected by these conditions. Should the impact of climate
change be material in nature, including destruction of our properties, or occur for lengthy periods
of time, our financial condition or results of operations may be adversely affected.
In
addition, changes in federal and state legislation and regulation on climate change
could result in increased capital expenditures to improve the energy efficiency of our existing
properties and could also require us to spend more on our new development properties without a
corresponding increase in revenue.
Insurance Policy Deductibles, Exclusions and Counterparties
As of December 31, 2010, the Operating Partnerships property
insurance policy provides for a per occurrence deductible of $250,000 and self-insured retention of
$5.0 million per occurrence, subject to a maximum annual aggregate self-insured retention of $7.5
million, with approximately 80% of any excess losses being covered by insurance. Any earthquake and
named windstorm losses are subject to a deductible of 5% of the values of the buildings involved in
the losses and are not subject to the aggregate self-insured retention. The Operating Partnerships
general liability and workers compensation policies at December 31, 2010 provide for a $2.0
million and $1.0 million per occurrence deductible, respectively. These higher deductible and
self-insured retention amounts do expose the Operating Partnership to greater potential uninsured
losses, but management has reviewed its claims history over the years
and believes the savings in insurance premium expense justify this potential
increased exposure over the long-term. However, the potential impact of climate change and
increased severe weather could cause a significant increase in insurance premiums and deductibles,
particularly for our coastal properties, or a decrease in the availability of coverage, either of
which could expose the Operating Partnership to even greater uninsured losses which may adversely
affect our financial condition or results of operations.
As a result of the terrorist attacks of September 11, 2001, property insurance carriers
created exclusions for losses from terrorism from our all risk property insurance policies. As of
December 31, 2010, the Operating Partnership was insured for $500.0 million in terrorism insurance
coverage, with a $100,000 deductible. This coverage excludes losses from nuclear, biological and
chemical attacks. In the event of a terrorist attack impacting one or more of our properties, we
could lose the revenues from the property, our capital investment in the property and possibly face
liability claims from residents or others suffering injuries or losses. The Operating Partnership
has become more susceptible to large losses as it has transformed its portfolio, becoming more
concentrated in fewer, more valuable assets over a smaller geographical footprint.
In addition, the Operating Partnership relies on third party insurance providers for its
property, general liability and workers compensation insurance. While there has yet to be any
non-performance by these major insurance providers, should any of them experience liquidity issues
or other financial distress, it could negatively impact the Operating Partnership.
Non-Performance by Our Operating Counterparties Could Adversely Affect Our Performance
We have relationships with and, from time to time, we execute transactions with or receive
services from many counterparties. As a result, defaults by counterparties could result in services
not being provided, or volatility in the
financial markets could affect counterparties ability to complete transactions with us as
intended, both of which could result in disruptions to our operations that may adversely affect our
business and results of operations.
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Debt Financing and Preference Units Could Adversely Affect Our Performance
General
Please refer to Item 7, Managements Discussion and Analysis of Financial Condition and
Results of Operations, for the Operating Partnerships total debt and unsecured debt summaries as
of December 31, 2010.
In addition to debt, we have $200.0 million of combined liquidation value of outstanding
preference units with a weighted average dividend preference of 6.93% per annum as of December 31,
2010. Our use of debt and preferred equity financing creates certain risks, including the
following:
Disruptions in the Financial Markets Could Adversely Affect Our Ability to Obtain Debt Financing and Impact our Acquisitions and Dispositions |
Dislocations and liquidity disruptions in capital and credit markets could impact liquidity in
the debt markets, resulting in financing terms that are less attractive to us and/or the
unavailability of certain types of debt financing. Should the capital and credit markets experience
volatility and the availability of funds again become limited, or be available only on unattractive
terms, we will incur increased costs associated with issuing debt instruments. In addition, it is
possible that our ability to access the capital and credit markets may be limited or precluded by
these or other factors at a time when we would like, or need, to do so, which would adversely
impact our ability to refinance maturing debt and/or react to changing economic and business
conditions. Uncertainty in the credit markets could negatively impact our ability to make
acquisitions and make it more difficult or not possible for us to sell properties or may adversely
affect the price we receive for properties that we do sell, as prospective buyers may experience
increased costs of debt financing or difficulties in obtaining debt financing. Potential continued
disruptions in the financial markets could also have other unknown adverse effects on us or the
economy generally and may cause the price of EQRs Common Shares to fluctuate significantly and/or
to decline.
Potential Reforms to Fannie Mae and Freddie Mac Could Adversely Affect Our Performance
There is significant uncertainty surrounding the futures of Fannie Mae and Freddie Mac. Should
Fannie Mae and Freddie Mac have their mandates
changed or reduced, be disbanded or reorganized by the government or
otherwise discontinue providing liquidity to our sector, it would significantly reduce
our access to debt capital and/or increase borrowing costs and would significantly reduce our sales
of assets and/or the values realized upon sale. Disruptions in the floating rate tax-exempt bond market (where interest rates reset
weekly) and in the credit markets perception of Fannie Mae and Freddie Mac, which guarantee and
provide liquidity for these bonds, have been experienced in the past and may be experienced in the
future and could result in an increase in interest rates on these debt obligations. These bonds
could also be put to our consolidated subsidiaries if Fannie Mae or Freddie Mac fail to satisfy
their guaranty obligations. While this obligation is in almost all cases non-recourse to us, this
could cause the Operating Partnership to have to repay these obligations on short notice or risk
foreclosure actions on the collateralized assets.
Non-Performance by Our Financial Counterparties Could Adversely Affect Our Performance
Although we have not experienced any material counterparty non-performance, disruptions in
financial and credit markets could, among other things, impede the ability of our counterparties to
perform on their contractual obligations. There are multiple financial institutions that are
individually committed to lend us varying amounts as part of our revolving credit facility. Should
any of these institutions fail to fund their committed amounts when contractually required, our
financial condition could be adversely affected. Should several of these institutions fail to fund,
we could experience significant financial distress. One of the financial institutions, with a
commitment of $75.0 million, declared bankruptcy in 2008 and will not honor its financial
commitment. Our borrowing capacity under the credit facility has in essence been permanently
reduced to $1.425 billion.
The Operating Partnership also has developed assets with joint venture partners which were
financed by financial institutions that have experienced varying degrees of distress in the past
and could experience similar distress as economic conditions change. If one or more of these
lenders fail to fund when contractually required, the Operating
Partnership or its joint venture partner may be unable to complete construction of its
development properties.
A Significant Downgrade in Our Credit Ratings Could Adversely Affect Our Performance
A significant downgrade in our credit ratings, while not affecting our ability to draw
proceeds under the revolving credit facility, would cause our borrowing costs to increase under the
facility and impact our ability to
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borrow secured and unsecured debt,
or otherwise limit our access to capital. In addition, a downgrade below investment grade would
require us to post cash collateral and/or letters of credit in favor of some of our secured lenders
to cover our self-insured property and liability insurance deductibles or to obtain lower
deductible insurance compliant with the lenders requirements at the lower rating level.
Scheduled Debt Payments Could Adversely Affect Our Financial Condition
In the future, our cash flow could be insufficient to meet required payments of principal and
interest or to pay distributions on our securities at expected levels.
We may not be able to refinance existing debt, including joint venture indebtedness (which in
virtually all cases requires substantial principal payments at maturity) and, if we can, the terms
of such refinancing might not be as favorable as the terms of existing indebtedness. If principal
payments due at maturity cannot be refinanced, extended or paid with proceeds of other capital
transactions, such as new equity capital, our operating cash flow will not be sufficient in all years to
repay all maturing debt. As a result, certain of our other debt may cross default, we may be forced
to postpone capital expenditures necessary for the maintenance of our properties, we may have to
dispose of one or more properties on terms that would otherwise be unacceptable to us or we may be
forced to allow the mortgage holder to foreclose on a property. Foreclosure on mortgaged properties or an inability to refinance existing
indebtedness would likely have a negative impact on our financial condition and results of
operations.
Please refer to Item 7, Managements Discussion and Analysis of Financial Condition and
Results of Operations, for the Operating Partnerships debt maturity schedule as of December 31,
2010.
Financial Covenants Could Adversely Affect the Operating Partnerships Financial Condition
The mortgages on our properties may contain customary negative covenants that, among other
things, limit our ability, without the prior consent of the lender, to further mortgage the
property and to reduce or change insurance coverage. In addition, our unsecured credit facilities
contain certain restrictions, requirements and other limitations on our ability to incur debt. The
indentures under which a substantial portion of our unsecured debt was issued also contain certain
financial and operating covenants including, among other things, maintenance of certain financial
ratios, as well as limitations on our ability to incur secured and unsecured debt (including
acquisition financing), and to sell all or substantially all of our assets. Our credit facilities
and indentures are cross-defaulted and also contain cross default provisions with other material
debt. While the Operating Partnership believes it was in compliance with its unsecured public debt
covenants for both the years ended December 31, 2010 and 2009, should it fall out of compliance, it
would likely have a negative impact on our financial condition and results of operations.
Some of the properties were financed with tax-exempt bonds that contain certain restrictive
covenants or deed restrictions. We have retained an independent outside consultant to monitor
compliance with the restrictive covenants and deed restrictions that affect these properties. If
these bond compliance requirements restrict our ability to increase our rental rates to low or
moderate-income residents, or eligible/qualified residents, then our income from these properties
may be limited. While we generally believe that the interest rate benefit attendant to properties
with tax-exempt bonds more than outweighs any loss of income due to restrictive covenants or deed
restrictions, this may not always be the case.
Our Degree of Leverage Could Limit Our Ability to Obtain Additional Financing
Our degree of leverage could have important consequences to security holders. For example, the
degree of leverage could affect our ability to obtain additional financing in the future for
working capital, capital expenditures, acquisitions, development or other general corporate
purposes, making us more vulnerable to a downturn in business or the economy in general. Our
consolidated debt-to-total market capitalization ratio was 38.4% as of December 31,
2010. In addition, our most restrictive unsecured public debt covenants are as follows:
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December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Total Debt to Adjusted Total Assets (not to exceed 60%) |
48.5 | % | 48.8 | % | ||||
Secured Debt to Adjusted Total Assets (not to exceed
40%) |
23.2 | % | 24.9 | % | ||||
Consolidated Income Available for Debt Service to
Maximum Annual Service Charges
(must be at least 1.5 to 1) |
2.46 | 2.44 | ||||||
Total Unsecured Assets to Unsecured Debt
(must be at least 150%) |
256.0 | % | 256.5 | % |
Rising Interest Rates Could Adversely Affect Cash Flow
Advances under our credit facilities bear interest at variable rates based upon LIBOR at
various interest periods, plus a spread dependent upon the Operating Partnerships credit rating,
or based upon bids received from the lending group. Certain public issuances of our senior
unsecured debt instruments may also, from time to time, bear interest at floating rates. We may
also borrow additional money with variable interest rates in the future. Increases in interest
rates would increase our interest expense under these debt instruments and would increase the costs
of refinancing existing debt and of issuing new debt. Accordingly, higher interest rates could
adversely affect cash flow and our ability to service our debt and make distributions to security
holders.
Derivatives and Hedging Activity Could Adversely Affect Cash Flow
In the normal course of business, we use derivatives to manage our exposure to interest rate
volatility on debt instruments, including hedging for future debt issuances. At other times we may
utilize derivatives to increase our exposure to floating interest rates. There can be no assurance
that these hedging arrangements will have the desired beneficial impact. These arrangements, which
can include a number of counterparties, may expose us to additional risks, including failure of any
of our counterparties to perform under these contracts, and may involve extensive costs, such as
transaction fees or breakage costs, if we terminate them. No strategy can completely insulate us
from the risks associated with interest rate fluctuations.
We Depend on Our Key Personnel
We depend on the efforts of the Chairman of EQRs Board of Trustees, Samuel Zell, and EQRs
executive officers, particularly David J. Neithercut, EQRs President and Chief Executive Officer
(CEO). If they resign or otherwise cease to be employed by us, our operations could be
temporarily adversely affected. Mr. Zell has entered into retirement benefit and noncompetition
agreements with the Company.
Control and Influence by Significant OP Unit Holders Could Be Exercised in a Manner Adverse to
Other OP Unit Holders
The consent of certain affiliates of Mr. Zell is required for certain amendments to ERPOPs
Sixth Amended and Restated Agreement of Limited Partnership (the Partnership Agreement). As a
result of their security ownership and rights concerning amendments to the Partnership Agreement,
the Zell affiliates may have influence over ERPOP. Although to ERPOPs knowledge these OP Unit
holders have not agreed to act together on any matter, they would be in a position to exercise even
more influence over ERPOPs affairs if they were to act together in the future. This influence
could conceivably be exercised in a manner that is inconsistent with the interests of other OP Unit
holders. For additional information regarding the security ownership of Mr. Zell and EQRs
executive officers, see EQRs definitive proxy statement.
Our Success Is Dependent on our General Partners Compliance with Federal Income Tax Requirements
We rely to a significant extent upon our general partner, EQR, as our source of equity
capital. EQR is required to satisfy numerous technical requirements to remain qualified as a REIT
for federal income tax purposes. EQRs failure to qualify as a REIT could have a material adverse
impact upon its, and consequently our, ability to raise equity capital. Please see the Our Success
as a REIT Is Dependent on Compliance with Federal Income Tax Requirements, Compliance with REIT
Distribution Requirements May Affect Our Financial Condition and Federal Income Tax
Considerations sections included in Risk Factors in EQRs Annual Report on Form 10-K for a
discussion of these federal income tax considerations.
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Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
As of December 31, 2010, the Operating Partnership, directly or indirectly through investments
in title holding entities, owned all or a portion of 451 properties located in 17 states and the
District of Columbia consisting of 129,604 apartment units. The Operating Partnerships properties
are summarized by building type in the following table:
Average | ||||||||||||
Type | Properties | Apartment Units | Apartment Units | |||||||||
Garden |
354 | 100,551 | 284 | |||||||||
Mid/High-Rise |
95 | 24,315 | 256 | |||||||||
Military Housing |
2 | 4,738 | 2,369 | |||||||||
Total |
451 | 129,604 | ||||||||||
The Operating Partnerships properties are summarized by ownership type in the following
table:
Properties | Apartment Units | |||||||
Wholly Owned Properties |
425 | 119,634 | ||||||
Partially Owned Properties Consolidated |
24 | 5,232 | ||||||
Military Housing |
2 | 4,738 | ||||||
451 | 129,604 | |||||||
The following table sets forth certain information by market relating to the Operating
Partnerships properties at December 31, 2010:
PORTFOLIO SUMMARY
% of | Average | |||||||||||||||||||
% of Total | Stabilized | Rental | ||||||||||||||||||
Markets | Properties | Apartment Units | Apartment Units | NOI | Rate (1) | |||||||||||||||
1 New York Metro Area |
28 | 8,290 | 6.4 | % | 12.7 | % | $ | 2,843 | ||||||||||||
2 DC Northern Virginia |
31 | 10,393 | 8.0 | % | 12.1 | % | 1,869 | |||||||||||||
3 South Florida |
38 | 12,869 | 9.9 | % | 9.1 | % | 1,313 | |||||||||||||
4 Los Angeles |
39 | 8,311 | 6.4 | % | 8.1 | % | 1,717 | |||||||||||||
5 Boston |
28 | 5,711 | 4.4 | % | 7.1 | % | 2,204 | |||||||||||||
6 Seattle/Tacoma |
43 | 9,748 | 7.5 | % | 6.7 | % | 1,293 | |||||||||||||
7 San Francisco Bay Area |
35 | 6,606 | 5.1 | % | 6.0 | % | 1,683 | |||||||||||||
8 San Diego |
14 | 4,963 | 3.8 | % | 5.2 | % | 1,789 | |||||||||||||
9 Phoenix |
36 | 10,769 | 8.3 | % | 4.8 | % | 848 | |||||||||||||
10 Denver |
23 | 7,967 | 6.2 | % | 4.7 | % | 1,044 | |||||||||||||
11 Suburban Maryland |
21 | 5,782 | 4.5 | % | 4.5 | % | 1,346 | |||||||||||||
12 Orlando |
26 | 8,042 | 6.2 | % | 4.2 | % | 961 | |||||||||||||
13 Orange County, CA |
11 | 3,490 | 2.7 | % | 3.2 | % | 1,518 | |||||||||||||
14 Atlanta |
20 | 6,183 | 4.8 | % | 3.0 | % | 961 | |||||||||||||
15 Inland Empire, CA |
11 | 3,639 | 2.8 | % | 2.8 | % | 1,352 | |||||||||||||
16 All Other Markets (2) |
45 | 12,103 | 9.3 | % | 5.8 | % | 975 | |||||||||||||
Total |
449 | 124,866 | 96.3 | % | 100.0 | % | 1,444 | |||||||||||||
Military Housing |
2 | 4,738 | 3.7 | % | | | ||||||||||||||
Grand Total |
451 | 129,604 | 100.0 | % | 100.0 | % | $ | 1,444 | ||||||||||||
(1) | Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the month |
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of December 2010. | ||
(2) | All Other Markets Each individual market is less than 2.0% of stabilized NOI. |
Note: Projects under development are not included in the Portfolio Summary until construction has
been completed, at which time the projects are included at their stabilized NOI. Projects under
lease-up are included at their stabilized NOI.
The Operating Partnerships properties had an average occupancy of approximately 94.1%
(94.5% on a same store basis) at December 31, 2010. Certain of the Operating Partnerships
properties are encumbered by mortgages and additional detail can be found on Schedule III Real
Estate and Accumulated Depreciation. Resident leases are generally for twelve months in length and
can require security deposits. The garden-style properties are generally defined as properties with
two and/or three story buildings while the mid-rise/high-rise are defined as properties with
greater than three story buildings. These two property types typically provide residents with
amenities, which may include a clubhouse, swimming pool, laundry facilities and cable television
access. Certain of these properties offer additional amenities such as saunas, whirlpools, spas,
sports courts and exercise rooms or other amenities. In addition, many of our urban properties have
parking garage and/or retail components. The military housing properties are defined as those
properties located on military bases.
The distribution of the properties throughout the United States reflects the Operating
Partnerships belief that geographic diversification helps insulate the portfolio from regional and
economic influences. At the same time, the Operating Partnership has sought to create clusters of
properties within each of its primary markets in order to achieve economies of scale in management
and operation. The Operating Partnership may nevertheless acquire additional multifamily properties
located anywhere in the United States.
The properties currently in various stages of development and lease-up at December 31, 2010
are included in the following table:
Consolidated Development and Lease-Up Projects as of December 31, 2010
(Amounts in thousands except for project and apartment unit amounts)
No. of | Total | Total | Total Book Value Not |
Estimated | Estimated | |||||||||||||||||||||||||||||||||||||||
Apartment | Capital | Book Value | Placed in | Total | Percentage | Percentage | Percentage | Completion | Stabilization | |||||||||||||||||||||||||||||||||||
Projects | Location | Units | Cost (1) | to Date | Service | Debt | Completed | Leased | Occupied | Date | Date | |||||||||||||||||||||||||||||||||
Projects Under Development Wholly Owned: | ||||||||||||||||||||||||||||||||||||||||||||
Red 160 (formerly Redmond Way) | Redmond, WA |
250 | $ | 84,382 | $ | 76,964 | $ | 76,964 | $ | | 97 | % | 86 | % | 68 | % | Q1 2011 | Q1 2012 | ||||||||||||||||||||||||||
500 West 23rd Street (formerly 10 Chelsea) (2) |
New York, NY |
111 | 55,555 | 27,382 | 27,382 | | 33 | % | | | Q4 2011 | Q4 2012 | ||||||||||||||||||||||||||||||||
Savoy III | Aurora, CO |
168 | 23,856 | 5,409 | 5,409 | | 7 | % | | | Q3 2012 | Q2 2013 | ||||||||||||||||||||||||||||||||
2201 Pershing Drive | Arlington, VA |
188 | 64,242 | 14,707 | 14,707 | | 1 | % | | | Q3 2012 | Q3 2013 | ||||||||||||||||||||||||||||||||
Projects Under Development Wholly Owned | 717 | 228,035 | 124,462 | 124,462 | | |||||||||||||||||||||||||||||||||||||||
Projects Under Development | 717 | 228,035 | 124,462 | 124,462 | | |||||||||||||||||||||||||||||||||||||||
Completed Not Stabilized Wholly Owned (3): | ||||||||||||||||||||||||||||||||||||||||||||
Reunion at Redmond Ridge | Redmond, WA |
321 | 53,175 | 53,151 | | | 94 | % | 93 | % | Completed | Q1 2011 | ||||||||||||||||||||||||||||||||
Westgate | Pasadena, CA |
480 | 165,558 | 154,886 | | 135,000 | (4) | 80 | % | 76 | % | Completed | Q3 2011 | |||||||||||||||||||||||||||||||
425 Mass (5) | Washington, D.C. |
559 | 166,750 | 166,750 | | | 61 | % | 58 | % | Completed | Q1 2012 | ||||||||||||||||||||||||||||||||
Vantage Pointe (5) | San Diego, CA |
679 | 200,000 | 200,000 | | | 42 | % | 41 | % | Completed | Q3 2012 | ||||||||||||||||||||||||||||||||
Projects Completed Not Stabilized Wholly Owned | 2,039 | 585,483 | 574,787 | | 135,000 | |||||||||||||||||||||||||||||||||||||||
Completed Not Stabilized Partially Owned (3): | ||||||||||||||||||||||||||||||||||||||||||||
The Brooklyner (formerly 111 Lawrence) |
Brooklyn, NY |
490 | 272,368 | 257,748 | | 141,741 | 93 | % | 89 | % | Completed | Q2 2011 | ||||||||||||||||||||||||||||||||
Projects Completed Not Stabilized Partially Owned | 490 | 272,368 | 257,748 | | 141,741 | |||||||||||||||||||||||||||||||||||||||
Projects Completed Not Stabilized |
2,529 | 857,851 | 832,535 | | 276,741 | |||||||||||||||||||||||||||||||||||||||
Completed and Stabilized During the Quarter Wholly Owned: |
||||||||||||||||||||||||||||||||||||||||||||
70 Greene (formerly 77 Hudson) | Jersey City, NJ |
480 | 268,458 | 267,403 | | | 93 | % | 91 | % | Completed | Stabilized | ||||||||||||||||||||||||||||||||
Third Square (formerly 303 Third) | Cambridge, MA |
482 | 257,457 | 256,546 | | | 94 | % | 92 | % | Completed | Stabilized | ||||||||||||||||||||||||||||||||
Projects Completed and Stabilized During the Quarter Wholly Owned |
962 | 525,915 | 523,949 | | | |||||||||||||||||||||||||||||||||||||||
Projects Completed and Stabilized During the Quarter |
962 | 525,915 | 523,949 | | | |||||||||||||||||||||||||||||||||||||||
Total Projects | 4,208 | $ | 1,611,801 | $ | 1,480,946 | $ | 124,462 | (6) | $ | 276,741 | ||||||||||||||||||||||||||||||||||
Land Held for Development | N/A | N/A | $ | 235,247 | $ | 235,247 | $ | 18,342 | ||||||||||||||||||||||||||||||||||||
(1) | Total capital cost represents estimated cost for projects under development and/or developed and all capitalized costs incurred to date plus any estimates of costs remaining to be funded for all projects, all in accordance with GAAP. | |
(2) | 500 West 23rd Street The land under this development is subject to a long-term ground lease. |
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(3) | Properties included here are substantially complete. However, they may still require additional exterior and interior work for all apartment units to be available for leasing. | |
(4) | Debt is tax-exempt bonds that are entirely outstanding, with $16.8 million held in escrow by the lender and released as draw requests are made. This escrowed amount is classified as Deposits restricted in the consolidated balance sheets at December 31, 2010. The Operating Partnership paid off the $28.2 million in taxable bonds during the fourth quarter of 2010. | |
(5) | The Operating Partnership acquired these completed development projects prior to stabilization and has begun/continued lease-up activities. | |
(6) | Total book value not placed in service excludes $5.9 million of construction-in-progress related to the reconstruction of the Prospect Towers garage. |
Item 3. Legal Proceedings
The Operating Partnership is party to a housing discrimination lawsuit brought by a non-profit
civil rights organization in April 2006 in the U.S. District Court for the District of Maryland.
The suit alleges that the Operating Partnership designed and built approximately 300 of its
properties in violation of the accessibility requirements of the Fair Housing Act and Americans
With Disabilities Act. The suit seeks actual and punitive damages, injunctive relief (including
modification of non-compliant properties), costs and attorneys fees. The Operating Partnership
believes it has a number of viable defenses, including that a majority of the named properties were
completed before the operative dates of the statutes in question and/or were not designed or built
by the Operating Partnership. Accordingly, the Operating Partnership is defending the suit
vigorously. Due to the pendency of the Operating Partnerships defenses and the uncertainty of many
other critical factual and legal issues, it is not possible to determine or predict the outcome of
the suit or a possible loss or a range of loss, and no amounts have been accrued at December 31,
2010. While no assurances can be given, the Operating Partnership does not believe that the suit,
if adversely determined, would have a material adverse effect on the Operating Partnership.
The Operating Partnership does not believe there is any other litigation pending or threatened
against it that, individually or in the aggregate, may reasonably be expected to have a material
adverse effect on the Operating Partnership.
Item 4. Reserved
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PART II
Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
OP Unit Dividends
There is no established public market for the OP Units.
The following table sets forth, for the years indicated, the distributions declared on the
Operating Partnerships OP Units.
Distributions | ||||||||
2010 | 2009 | |||||||
Fourth Quarter Ended December 31, |
$ | 0.4575 | $ | 0.3375 | ||||
Third Quarter Ended September 30, |
$ | 0.3375 | $ | 0.3375 | ||||
Second Quarter Ended June 30, |
$ | 0.3375 | $ | 0.4825 | ||||
First Quarter Ended March 31, |
$ | 0.3375 | $ | 0.4825 |
The number of record holders of OP Units and Long-Term Incentive Plan (LTIP) Units in
the Operating Partnership at February 16, 2011 were 528 and 18, respectively. The number of
outstanding OP and LTIP Units as of February 16, 2011 were 307,338,881 and 401,971, respectively.
Unregistered OP Units Issued in the Quarter Ended December 31, 2010
During the quarter ended December 31, 2010, the Operating Partnership issued 15,948 OP Units
having a value of $0.8 million. OP Units are generally exchangeable into Common Shares of EQR on a
one-for-one basis or, at the option of the Operating Partnership, the cash equivalent
thereof, at any time one year after the date of issuance. These OP Units were issued in exchange
for direct or indirect interest in multifamily properties in private placement transactions under
Section 4(2) of the Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder, as these were transactions by an issuer not involving a public offering. In light of
the manner of the sale and information obtained by the Operating Partnership from the limited
partners in connection with these transactions, the Operating Partnership believes it may rely on
these exemptions.
Equity Compensation Plan Information
The following table provides information as of December 31, 2010 with respect to EQRs Common
Shares that may be issued under its existing equity compensation plans.
Number of securities | ||||||||||||
remaining available | ||||||||||||
Number of securities | Weighted average | for future issuance | ||||||||||
to be issued upon | exercise price of | under equity | ||||||||||
exercise of | outstanding | compensation plans | ||||||||||
outstanding options, | options, warrants | (excluding securities | ||||||||||
Plan Category | warrants and rights | and rights | in column (a)) | |||||||||
(a) (1) | (b) (1) | (c) (2) | ||||||||||
Equity compensation plans
approved by shareholders |
10,106,488 | $ | 33.00 | 8,799,709 | ||||||||
Equity compensation plans not
approved by shareholders |
N/A | N/A | N/A |
(1) | The amounts shown in columns (a) and (b) of the above table do not include 911,950 outstanding EQR Common Shares (all of which are restricted and subject to vesting requirements) that were granted under EQRs Amended and Restated 1993 Share Option and Share Award Plan, as amended (the 1993 Plan) and EQRs 2002 Share Incentive Plan, as restated (the 2002 Plan) and outstanding EQR Common Shares that have been purchased by employees and trustees under EQRS ESPP. | |
(2) | Includes 5,395,739 EQR Common Shares that may be issued under the 2002 Plan, of which only 25% may |
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be in the form of restricted shares, and 3,403,970 EQR Common Shares that may be sold to employees and trustees under the ESPP. |
The aggregate number of securities available for issuance (inclusive of restricted shares
previously granted and outstanding and shares underlying outstanding options) under the 2002 Plan
equals 7.5% of EQRs outstanding Common Shares, calculated on a fully diluted basis, determined
annually on the first day of each calendar year. On January 1, 2011, this amount equaled
22,785,696, of which 5,395,739 shares were available for future issuance. No awards may be granted
under the 2002 Plan after February 20, 2012.
Any EQR Common Shares issued pursuant to EQRs incentive equity compensation and employee
share purchase plans will result in the Operating Partnership issuing OP Units to EQR on a
one-for-one basis, with the Operating Partnership receiving the net cash proceeds of such
issuances.
Item 6. Selected Financial Data
The following table sets forth selected financial and operating information on a historical
basis for the Operating Partnership. The following information should be read in conjunction with
all of the financial statements and notes thereto included elsewhere in this Form 10-K. The
historical operating and balance sheet data have been derived from the historical financial
statements of the Operating Partnership. All amounts have also been restated in accordance with the
guidance on discontinued operations. Certain capitalized terms as used herein are defined in the
Notes to Consolidated Financial Statements.
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CONSOLIDATED HISTORICAL FINANCIAL INFORMATION
(Financial information in thousands except for per Unit and property data)
Year Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
OPERATING DATA: |
||||||||||||||||||||
Total revenues from continuing operations |
$ | 1,995,519 | $ | 1,856,503 | $ | 1,886,988 | $ | 1,739,444 | $ | 1,503,666 | ||||||||||
Interest and other income |
$ | 5,469 | $ | 16,585 | $ | 33,337 | $ | 19,660 | $ | 30,430 | ||||||||||
(Loss) income from continuing operations |
$ | (19,844 | ) | $ | 2,931 | $ | (40,054 | ) | $ | (4,982 | ) | $ | (29,983 | ) | ||||||
Discontinued operations, net |
$ | 315,827 | $ | 379,098 | $ | 476,467 | $ | 1,052,338 | $ | 1,177,600 | ||||||||||
Net income |
$ | 295,983 | $ | 382,029 | $ | 436,413 | $ | 1,047,356 | $ | 1,147,617 | ||||||||||
Net income available to Units |
$ | 282,341 | $ | 368,099 | $ | 419,241 | $ | 1,015,769 | $ | 1,100,721 | ||||||||||
Earnings per Unit basic: |
||||||||||||||||||||
(Loss) from continuing operations available
to Units |
$ | (0.11 | ) | $ | (0.04 | ) | $ | (0.20 | ) | $ | (0.12 | ) | $ | (0.25 | ) | |||||
Net income available to Units |
$ | 0.95 | $ | 1.27 | $ | 1.46 | $ | 3.40 | $ | 3.55 | ||||||||||
Weighted average Units outstanding |
296,527 | 289,167 | 287,631 | 298,392 | 310,452 | |||||||||||||||
Earnings per Unit diluted: |
||||||||||||||||||||
(Loss) from continuing operations available
to Units |
$ | (0.11 | ) | $ | (0.04 | ) | $ | (0.20 | ) | $ | (0.12 | ) | $ | (0.25 | ) | |||||
Net income available to Units |
$ | 0.95 | $ | 1.27 | $ | 1.46 | $ | 3.40 | $ | 3.55 | ||||||||||
Weighted average Units outstanding |
296,527 | 289,167 | 287,631 | 298,392 | 310,452 | |||||||||||||||
Distributions declared per Unit outstanding |
$ | 1.47 | $ | 1.64 | $ | 1.93 | $ | 1.87 | $ | 1.79 | ||||||||||
BALANCE SHEET DATA (at end of period): |
||||||||||||||||||||
Real estate, before accumulated depreciation |
$ | 19,702,371 | $ | 18,465,144 | $ | 18,690,239 | $ | 18,333,350 | $ | 17,235,175 | ||||||||||
Real estate, after accumulated depreciation |
$ | 15,365,014 | $ | 14,587,580 | $ | 15,128,939 | $ | 15,163,225 | $ | 14,212,695 | ||||||||||
Total assets |
$ | 16,184,194 | $ | 15,417,515 | $ | 16,535,110 | $ | 15,689,777 | $ | 15,062,219 | ||||||||||
Total debt |
$ | 9,948,076 | $ | 9,392,570 | $ | 10,483,942 | $ | 9,478,157 | $ | 8,017,008 | ||||||||||
Redeemable Limited Partners |
$ | 383,540 | $ | 258,280 | $ | 264,394 | $ | 345,165 | $ | 509,310 | ||||||||||
Noncontrolling Interests Partially Owned Properties |
$ | 7,991 | $ | 11,054 | $ | 25,520 | $ | 26,236 | $ | 26,814 | ||||||||||
Total partners capital |
$ | 5,200,585 | $ | 5,163,459 | $ | 5,043,185 | $ | 5,079,739 | $ | 5,800,205 | ||||||||||
OTHER DATA: |
||||||||||||||||||||
Total properties (at end of period) |
451 | 495 | 548 | 579 | 617 | |||||||||||||||
Total apartment units (at end of period) |
129,604 | 137,007 | 147,244 | 152,821 | 165,716 | |||||||||||||||
Funds from operations available to
Units basic (1) (3) (4) |
$ | 622,786 | $ | 615,505 | $ | 618,372 | $ | 713,412 | $ | 712,524 | ||||||||||
Normalized funds from operations available to
Units basic (2) (3) (4) |
$ | 682,422 | $ | 661,542 | $ | 735,062 | $ | 699,029 | $ | 699,276 | ||||||||||
Cash flow provided by (used for): |
||||||||||||||||||||
Operating activities |
$ | 732,693 | $ | 672,462 | $ | 755,252 | $ | 793,232 | $ | 755,774 | ||||||||||
Investing activities |
$ | (646,114 | ) | $ | 103,579 | $ | (344,028 | ) | $ | (200,749 | ) | $ | (259,780 | ) | ||||||
Financing activities |
$ | 151,541 | $ | (1,473,547 | ) | $ | 428,739 | $ | (801,929 | ) | $ | (324,545 | ) |
(1) | The National Association of Real Estate Investment Trusts (NAREIT) defines funds from operations (FFO) (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States (GAAP)), excluding gains (or losses) from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. The April 2002 White Paper states that gain or |
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loss on sales of property is excluded from FFO for previously depreciated operating properties only. Once the Operating Partnership commences the conversion of apartment units to condominiums, it simultaneously discontinues depreciation of such property. | ||
(2) | Normalized funds from operations (Normalized FFO) begins with FFO and excludes: |
| the impact of any expenses relating to asset impairment and valuation allowances; | ||
| property acquisition and other transaction costs related to mergers and acquisitions and pursuit cost write-offs (other expenses); | ||
| gains and losses from early debt extinguishment, including prepayment penalties, preference unit redemptions and the cost related to the implied option value of non-cash convertible debt discounts; | ||
| gains and losses on the sales of non-operating assets, including gains and losses from land parcel and condominium sales, net of the effect of income tax benefits or expenses; and | ||
| other miscellaneous non-comparable items. |
(3) | The Operating Partnership believes that FFO and FFO available to Units are helpful to investors as supplemental measures of the operating performance of a real estate company, because they are recognized measures of performance by the real estate industry and by excluding gains or losses related to dispositions of depreciable property and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO available to Units can help compare the operating performance of a companys real estate between periods or as compared to different companies. The Operating Partnership also believes that Normalized FFO and Normalized FFO available to Units are helpful to investors as supplemental measures of the operating performance of a real estate company because they allow investors to compare the Operating Partnerships operating performance to its performance in prior reporting periods and to the operating performance of other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Operating Partnerships actual operating results. FFO, FFO available to Units, Normalized FFO and Normalized FFO available to Units do not represent net income, net income available to Units or net cash flows from operating activities in accordance with GAAP. Therefore, FFO, FFO available to Units, Normalized FFO and Normalized FFO available to Units should not be exclusively considered as alternatives to net income, net income available to Units or net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Operating Partnerships calculation of FFO, FFO available to Units, Normalized FFO and Normalized FFO available to Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies. | |
(4) | FFO available to Units and Normalized FFO available to Units are calculated on a basis consistent with net income available to Units and reflects adjustments to net income for preferred distributions and premiums on redemption of preference units in accordance with accounting principles generally accepted in the United States. | |
Note: See Item 7 for a reconciliation of net income to FFO, FFO available to Units, Normalized FFO and Normalized FFO available to Units. |
Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of the results of operations and financial condition of
the Operating Partnership should be read in connection with the Consolidated Financial Statements
and Notes thereto. Due to the Operating Partnerships ability to control its subsidiaries, each
such subsidiary entity has been consolidated with the Operating Partnership for financial reporting
purposes, except for an unconsolidated development land parcel and our military housing properties.
Capitalized terms used herein and not defined are as defined elsewhere in this Annual Report on
Form 10-K for the year ended December 31, 2010.
Forward-Looking Statements
Forward-looking statements in this Item 7 as well as elsewhere in this Annual Report on Form
10-K are intended to be made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These statements are based on current expectations, estimates,
projections and assumptions made by management. While the Operating Partnerships management
believes the assumptions underlying its forward-looking statements are reasonable, such information
is inherently subject to uncertainties and may involve certain risks, which could cause actual
results, performance or achievements of the Operating Partnership to differ materially from
anticipated future results, performance or achievements expressed or implied by such
forward-looking statements. Many of these uncertainties and risks are difficult to predict and
beyond managements control. Forward-looking statements are not guarantees of future performance,
results or events. The forward-looking statements contained herein are made as of the date hereof
and the Operating Partnership undertakes no obligation to update or supplement these
forward-looking statements. Factors that might cause such differences include, but are not limited
to the following:
| We intend to actively acquire and/or develop multifamily properties for rental operations as market conditions dictate. We may also acquire multifamily properties that are unoccupied or in the early stages of lease up. We may be unable to lease up these apartment properties on schedule, resulting in decreases in expected rental revenues and/or lower yields due to lower occupancy and rates as well as higher than expected |
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concessions. We may underestimate the costs necessary to bring an acquired property up to standards established for its intended market position or to complete a development property. Additionally, we expect that other major real estate investors with significant capital will compete with us for attractive investment opportunities or may also develop properties in markets where we focus our development efforts. This competition (or lack thereof) may increase (or depress) prices for multifamily properties. We may not be in a position or have the opportunity in the future to make suitable property acquisitions on favorable terms. The total number of development units, costs of development and estimated completion dates are subject to uncertainties arising from changing economic conditions (such as the cost of labor and construction materials), competition and local government regulation; |
| Debt financing and other capital required by the Operating Partnership may not be available or may only be available on adverse terms; | ||
| Labor and materials required for maintenance, repair, capital expenditure or development may be more expensive than anticipated; | ||
| Occupancy levels and market rents may be adversely affected by national and local economic and market conditions including, without limitation, new construction and excess inventory of multifamily housing and single family housing, slow or negative employment growth, availability of low interest mortgages for single family home buyers and the potential for geopolitical instability, all of which are beyond the Operating Partnerships control; and | ||
| Additional factors as discussed in Part I of this Annual Report on Form 10-K, particularly those under Item 1A. Risk Factors. |
Forward-looking statements and related uncertainties are also included in the Notes to
Consolidated Financial Statements in this report.
Overview
ERP Operating Limited Partnership (ERPOP), an Illinois limited partnership, was formed in
May 1993 to conduct the multifamily residential property business of Equity Residential (EQR).
EQR, a Maryland real estate investment trust (REIT) formed in March 1993, is an S&P 500 company
focused on the acquisition, development and management of high quality apartment properties in top
United States growth markets. EQR has elected to be taxed as a REIT.
EQR is one of the largest publicly traded real estate companies and is the largest publicly
traded owner of multifamily properties in the United States (based on the aggregate market value of
its outstanding Common Shares, the number of apartment units wholly owned and total revenues
earned). The Operating Partnerships corporate headquarters are located in Chicago, Illinois and
the Operating Partnership also operates property management offices
in each of its markets.
As of December 31, 2010, the Operating Partnership had
approximately 4,000 employees who provided
real estate operations, leasing, legal, financial, accounting, acquisition, disposition,
development and other support functions.
EQR is the general partner of, and as of December 31, 2010 owned an approximate 95.5%
ownership interest in ERPOP. All of EQRs property ownership,
development and related business operations are conducted through ERPOP and its
subsidiaries. References to the Operating Partnership include ERPOP and those entities owned or
controlled by it. References to the Company mean EQR and the Operating Partnership.
Business Objectives and Operating and Investing Strategies
The Operating Partnership invests in apartment communities located in strategically targeted
markets with the goal of maximizing our risk adjusted total return
(operating income plus capital
appreciation) on invested capital.
Our operating focus is on balancing occupancy and rental rates to maximize our revenue while
exercising tight cost control to generate the highest possible return to our shareholders. Revenue is maximized
by driving qualified resident prospects to our properties,
converting this traffic cost-effectively
into new leases at the highest rent possible, keeping our residents satisfied and renewing their
leases at yet higher rents.
While
we believe that it is our high-quality, well-located assets that bring our customers to us, it is our
customer service that keeps them renting with us and recommending us to their friends.
We use technology to engage our customers in the way that they want to be engaged. Many of
our residents utilize our web-based resident portal which allows them to review their account and make payments, provide feedback and make service requests on-line.
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We
seek to maximize capital appreciation of our properties by investing in markets that are
characterized by conditions favorable to multifamily property appreciation. These markets generally
feature one or more of the following:
| High barriers to entry where, because of land scarcity or government regulation, it is difficult or costly to build new apartment properties leading to low supply; | ||
| High single family home prices making our apartments a more economical housing choice; | ||
| Strong economic growth leading to household formation and job growth, which in turn leads to high demand for our apartments; and | ||
| An attractive quality of life leading to high demand and retention and allowing us to more readily increase rents. |
Acquisitions and developments may be financed from various sources of capital, which may
include retained cash flow, issuance of additional equity and debt securities, sales of properties,
joint venture agreements and collateralized and uncollateralized borrowings. In addition, the
Operating Partnership may acquire properties in transactions that include the issuance of limited
partnership interests in the Operating Partnership (OP Units) as consideration for the acquired
properties. Such transactions may, in certain circumstances, enable the sellers to defer, in whole
or in part, the recognition of taxable income or gain that might otherwise result from the sales.
ERPOP may also acquire land parcels to hold and/or sell based on market opportunities. The
Operating Partnership may also seek to acquire properties by purchasing defaulted or distressed
debt that encumbers desirable properties in the hope of obtaining title to property through
foreclosure or deed-in-lieu of foreclosure proceedings. The Operating Partnership has also, in the
past, converted some of its properties and sold them as condominiums but is not currently active in
this line of business.
The Operating Partnership primarily sources the funds for its new property acquisitions in its
core markets with the sales proceeds from selling assets that are
older or located in non-core markets. During the last five years, the Operating Partnership has sold over 97,000 apartment
units for an aggregate sales price of $7.2 billion and acquired
nearly 25,000 apartment units in its core markets for
approximately $5.5 billion.
We are currently acquiring and developing assets primarily in the following targeted metropolitan areas: Boston, New York, Washington DC, South
Florida, Southern California, San Francisco, Seattle and to a lesser
extent Denver. We also have investments (in the
aggregate about 18% of our NOI) in other markets including Atlanta, Phoenix, Portland, Oregon,
New England excluding Boston, Tampa, Orlando and Jacksonville but do
not intend to acquire or develop assets
in these markets.
As part of its strategy, the Operating Partnership purchases completed and fully occupied
apartment properties, partially completed or partially unoccupied properties or land on which
apartment properties can be constructed. We intend to hold a
diversified portfolio of assets across
our target markets. Currently, no single metropolitan area accounts for more than 17% of our NOI,
though no guarantee can be made that NOI concentration may not increase in the future.
We
endeavor to attract and retain the best employees by providing them with the
education, resources and opportunities to succeed. We provide many
classroom and on-line training
courses to assist our employees in interacting with prospects and residents as well as extensively
train our customer service specialists in maintaining the equipment and appliances on our
property sites. We actively promote from within and many senior corporate and property leaders
have risen from entry level or junior positions. We monitor our employees engagement by surveying
them annually and have consistently received high engagement scores.
We have a commitment to sustainability and consider the environmental impacts of our business
activities. With its high density, multifamily housing is, by its nature, an environmentally
friendly property type. Our recent acquisition and development
activities have been primarily concentrated in
pedestrian-friendly urban locations near public transportation. When
developing and renovating our properties, we strive to reduce energy
and water usage by investing in energy saving technology while positively impacting the experience
of our residents and the value of our assets. We continue to implement a combination of
irrigation, lighting and HVAC improvements at our properties that will reduce energy
and water consumption.
Current Environment
Through much of 2009, the Operating Partnership assumed a highly cautious outlook given
uncertainty in the general economy and the capital markets and
expected reduction in our property
operations. In late 2009, the Operating Partnership saw that occupancy was firming. This was an
especially encouraging sign as it came during the Operating
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Partnerships seasonally slower fourth
quarter. At the same time, the Operating Partnership also saw marked improvement in the capital markets. In response,
the Operating Partnership began acquiring assets and increasing rents for both new and renewing
residents, which led to better operating and investment performance for the Operating Partnership.
2010 was characterized by higher occupancy and rent levels than 2009. The Operating Partnership
increased rents to a greater extent in markets like the Northeast, where the economy was stronger
and multifamily operating conditions were better. In 2010, the Operating Partnership ceased to
hold the large cash balances (often $1.0 billion or more) that
it held in 2009 in anticipation of debt
maturities in an unsure capital markets climate. This had the result of increasing the Operating
Partnerships earnings by decreasing debt prefunding costs. Finally, the Operating Partnership was
aggressive in acquiring $1.5 billion of assets in its target markets in 2010. Improvement
materialized throughout 2010 and as we enter 2011, we expect strong growth in same store revenue
(anticipated increases ranging from 4.0% to 5.0%) and NOI (anticipated increases ranging from 5.0%
to 7.5%) and are optimistic that the improvement realized in 2010 will be sustained for the
foreseeable future.
We currently have access to multiple sources of capital including the equity markets as well
as both the secured and unsecured debt markets. In July 2010, the Operating Partnership completed
a $600.0 million unsecured ten year notes offering with a coupon of 4.75% and an all-in effective
interest rate of 5.09%. The all-in rate combined with its accretive nature compared to maturing
2011 fixed rate debt led the Operating Partnership to pursue this transaction. EQR also raised
$291.9 million in equity under its ATM Common Share offering program in 2010 and has raised an
additional $154.5 million under this program thus far in 2011.
Given the strong market for many of our disposition assets and increased competition for
assets in our target markets, we expect to be a net seller of assets in 2011 in contrast to being a
net buyer of assets in 2010. The Operating Partnership acquired 16 consolidated properties
consisting of 4,445 apartment units for $1.5 billion and six land parcels for $68.9 million during
the year ended December 31, 2010. While competition for the
properties we were interested in
acquiring increased as 2010 progressed due to the overall improvement in market fundamentals, we
were able to close several, of what we believe are, long-term, value added acquisition
opportunities. Our acquisition pipeline has moderated and we expect a greater concentration of our
2011 acquisitions to occur in the latter half of the year. We believe our access to capital, our
ability to execute large, complex transactions and our ability to efficiently stabilize large scale
lease up properties provide us with a competitive advantage. During the year ended December 31,
2010, the Operating Partnership sold 35 consolidated properties consisting of 7,171 apartment units
for $718.4 million and 27 unconsolidated properties consisting of 6,275 apartment units generating
cash proceeds to the Operating Partnership of $26.9 million, as
well as 2 condominium units for $0.4 million and one land parcel for $4.0 million. We expect
to continue strategic dispositions and see an increase in dispositions in 2011 as we believe there
is currently a robust market and favorable pricing for certain of our non-strategic assets. Our dispositions
in 2010 were at higher capitalization (cap) rates (see definition in Results of Operations) than
the acquisitions we completed. We expect this to continue in 2011 and expect to experience
dilution from past and future transactions.
We believe that cash and cash equivalents, securities readily convertible to cash, current
availability on our revolving credit facility and disposition proceeds for 2011 will provide
sufficient liquidity to meet our funding obligations relating to asset acquisitions, debt
maturities and existing development projects through 2011. We expect that our remaining longer-term
funding requirements will be met through some combination of new borrowings, equity issuances
(including EQRs ATM share offering program), property dispositions, joint ventures and cash
generated from operations. There is significant uncertainty surrounding the futures of Fannie Mae
and Freddie Mac. Any changes to their mandates could have a significant impact on the Operating
Partnership and may, among other things, lead to lower values for our disposition assets and higher
interest rates on our borrowings. Such changes may also provide an advantage to us by making the
cost of financing single family home ownership more expensive and provide us a competitive advantage given
the size of our balance sheet and the multiple sources of capital to which we have access.
We
believe that the Operating Partnership is well-positioned as of
December 31, 2010 (our properties are
geographically diverse and were approximately 94.1% occupied (94.5%
on a same store basis)), little new multifamily rental supply will be added to most of our markets over
the next several years and the long-term demographic picture is positive. We believe our strong
balance sheet and ample liquidity will allow us to fund our debt maturities and development
fundings in the near term, and should also allow us to take advantage of investment opportunities
in the future. As economic conditions continue to improve, the short-term nature of our leases and
the limited supply of new rental housing being constructed should allow us to realize revenue
growth and improvement in our operating results.
The Operating Partnership anticipates that 2011 same store expenses will only increase 1.0% to
2.0% primarily due to modest increases in payroll expenses, real estate tax rates and utility cost
growth (same store expenses increased 0.9% for 2010 when compared with the same period in the prior
year). This follows three consecutive years of excellent expense control (same store expenses
declined 0.1% between 2009 and 2008 and grew 2.2% between 2008 and 2007 and 2.1% between 2007 and
2006).
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The current environment information presented above is based on current expectations and
is forward-looking.
Results of Operations
In conjunction with our business objectives and operating strategy, the Operating Partnership
continued to invest in apartment properties located in strategically targeted markets during the
years ended December 31, 2010 and December 31, 2009. In summary, we:
Year Ended December 31, 2010:
| Acquired $1.1 billion of apartment properties consisting of 14 consolidated properties and 3,207 apartment units at a weighted average cap rate (see definition below) of 5.4% and six land parcels for $68.9 million, all of which we deem to be in our strategic targeted markets; | ||
| Acquired one unoccupied property in the second quarter of 2010 (425 Mass in Washington, D.C.) for $166.8 million consisting of 559 apartment units that is expected to stabilize in its third year of ownership at an 8.5% yield on cost and one property in the third quarter of 2010 (Vantage Pointe in San Diego, CA) for $200.0 million consisting of 679 apartment units that was in the early stages of lease up and is expected to stabilize in its third year of ownership at a 7.0% yield on cost; | ||
| Acquired the 75% equity interest it did not own in seven previously unconsolidated properties consisting of 1,811 apartment units at an implied cap rate of 8.4% in exchange for an approximate $30.0 million payment to its joint venture partner; | ||
| Sold $718.4 million of consolidated apartment properties consisting of 35 properties and 7,171 apartment units at a weighted average cap rate of 6.7%, 2 condominium units for $0.4 million and one land parcel for $4.0 million, the majority of which was in exit or less desirable markets; and | ||
| Sold the last of its 25% equity interests in an institutional joint venture consisting of 27 unconsolidated properties containing 6,275 apartment units. These properties were valued in their entirety at $417.8 million which results in an implied weighted average cap rate of 7.5% (generating cash to the Operating Partnership, net of debt repayments, of $26.9 million). |
Year Ended December 31, 2009:
| Acquired $145.0 million of apartment properties consisting of two properties and 566 apartment units (excluding the Operating Partnerships buyout of its partners interest in one previously unconsolidated property) and a long-term leasehold interest in a land parcel for $11.5 million, all of which we deem to be in our strategic targeted markets; and | ||
| Sold $1.0 billion of apartment properties consisting of 60 properties and 12,489 apartment units (excluding the Operating Partnerships buyout of its partners interest in one previously unconsolidated property), as well as 62 condominium units for $12.0 million, the majority of which was in exit or less desirable markets. |
The Operating Partnerships primary financial measure for evaluating each of its apartment
communities is net operating income (NOI). NOI represents rental income less property and
maintenance expense, real estate tax and insurance expense and property management expense. The
Operating Partnership believes that NOI is helpful to investors as a supplemental measure of its
operating performance because it is a direct measure of the actual operating results of the
Operating Partnerships apartment communities. The cap rate is generally the first year NOI yield
(net of replacements) on the Operating Partnerships investment.
Properties that the Operating Partnership owned for all of both 2010 and 2009 (the 2010 Same
Store Properties), which represented 112,042 apartment units, impacted the Operating Partnerships
results of operations. Properties that the Operating Partnership owned for all of both 2009 and
2008 (the 2009 Same Store Properties), which represented 113,598 apartment units, also impacted
the Operating Partnerships results of operations. Both the 2010 Same Store Properties and 2009
Same Store Properties are discussed in the following paragraphs.
The Operating Partnerships acquisition, disposition and completed development activities also
impacted overall results of operations for the years ended December 31, 2010 and 2009. Dilution, as
a result of the Operating
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Partnerships net asset sales in 2009, partially offset by net asset
acquisitions and lease up activity in 2010, negatively impacts property net operating income. The
impacts of these activities are discussed in greater detail in the following
paragraphs.
Comparison of the year ended December 31, 2010 to the year ended December 31, 2009
For the year ended December 31, 2010, the Operating Partnership reported diluted earnings per
Unit of $0.95 compared to $1.27 per Unit for the year ended December 31, 2009. The difference is
primarily due to $37.3 million in lower gains from property sales in 2010 vs. 2009 and $34.3
million in higher impairment losses in 2010 vs. 2009.
For the year ended December 31, 2010, loss from continuing operations increased approximately
$22.8 million when compared to the year ended December 31, 2009. The decrease in continuing
operations is discussed below.
Revenues from the 2010 Same Store Properties decreased $2.1 million primarily as a result of a
decrease in average rental rates charged to residents, partially offset by an increase in
occupancy. Expenses from the 2010 Same Store Properties increased $6.2 million primarily due to
increases in repairs and maintenance expenses (mostly due to greater storm-related costs such as
snow removal and roof repairs incurred during the first quarter of 2010), higher property
management costs and increases in utility costs, partially offset by lower real estate taxes and
leasing and advertising expenses. The following tables provide comparative same store results and
statistics for the 2010 Same Store Properties:
2010 vs. 2009
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) 112,042 Same Store Units
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) 112,042 Same Store Units
Results | Statistics | |||||||||||||||||||||||
Average | ||||||||||||||||||||||||
Rental | ||||||||||||||||||||||||
Description | Revenues | Expenses | NOI | Rate (1) | Occupancy | Turnover | ||||||||||||||||||
2010 |
$ | 1,728,268 | $ | 654,663 | $ | 1,073,605 | $ | 1,358 | 94.8 | % | 56.7 | % | ||||||||||||
2009 |
$ | 1,730,335 | $ | 648,508 | $ | 1,081,827 | $ | 1,375 | 93.7 | % | 61.5 | % | ||||||||||||
Change |
$ | (2,067 | ) | $ | 6,155 | $ | (8,222 | ) | $ | (17 | ) | 1.1 | % | (4.8 | %) | |||||||||
Change |
(0.1 | %) | 0.9 | % | (0.8 | %) | (1.2 | %) |
(1) | Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. |
The following table provides comparative same store operating expenses for the 2010 Same
Store Properties:
2010 vs. 2009
Same Store Operating Expenses
$ in thousands 112,042 Same Store Units
Same Store Operating Expenses
$ in thousands 112,042 Same Store Units
% of Actual | ||||||||||||||||||||
2010 | ||||||||||||||||||||
Actual | Actual | $ | % | Operating | ||||||||||||||||
2010 | 2009 | Change | Change | Expenses | ||||||||||||||||
Real estate taxes |
$ | 174,131 | $ | 177,180 | $ | (3,049 | ) | (1.7 | %) | 26.6 | % | |||||||||
On-site payroll (1) |
156,668 | 156,446 | 222 | 0.1 | % | 23.9 | % | |||||||||||||
Utilities (2) |
102,553 | 100,441 | 2,112 | 2.1 | % | 15.7 | % | |||||||||||||
Repairs and maintenance (3) |
97,166 | 94,223 | 2,943 | 3.1 | % | 14.8 | % | |||||||||||||
Property management costs (4) |
69,995 | 64,022 | 5,973 | 9.3 | % | 10.7 | % | |||||||||||||
Insurance |
21,545 | 21,525 | 20 | 0.1 | % | 3.3 | % | |||||||||||||
Leasing and advertising |
14,892 | 16,029 | (1,137 | ) | (7.1 | %) | 2.3 | % | ||||||||||||
Other on-site operating expenses (5) |
17,713 | 18,642 | (929 | ) | (5.0 | %) | 2.7 | % | ||||||||||||
Same store operating expenses |
$ | 654,663 | $ | 648,508 | $ | 6,155 | 0.9 | % | 100.0 | % | ||||||||||
(1) | On-site payroll Includes payroll and related expenses for on-site personnel including property managers, leasing consultants and maintenance staff. | |
(2) | Utilities Represents gross expenses prior to any recoveries under the Resident Utility Billing System (RUBS). Recoveries are reflected in rental income. | |
(3) | Repairs and maintenance Includes general maintenance costs, unit turnover costs including interior painting, routine landscaping, |
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security, exterminating, fire protection, snow removal, elevator, roof and parking lot repairs and other miscellaneous building repair costs. | ||
(4) | Property management costs Includes payroll and related expenses for departments, or portions of departments, that directly support on-site management. These include such departments as regional and corporate property management, property accounting, human resources, training, marketing and revenue management, procurement, real estate tax, property legal services and information technology. | |
(5) | Other on-site operating expenses Includes administrative costs such as office supplies, telephone and data charges and association and business licensing fees. |
The following table presents a reconciliation of operating income per the consolidated
statements of operations to NOI for the 2010 Same Store Properties.
Year Ended December 31, | ||||||||
2010 | 2009 | |||||||
(Amounts in thousands) | ||||||||
Operating income |
$ | 442,001 | $ | 496,601 | ||||
Adjustments: |
||||||||
Non-same store operating results |
(105,960 | ) | (21,336 | ) | ||||
Fee and asset management revenue |
(9,476 | ) | (10,346 | ) | ||||
Fee and asset management expense |
5,140 | 7,519 | ||||||
Depreciation |
656,633 | 559,271 | ||||||
General and administrative |
39,887 | 38,994 | ||||||
Impairment |
45,380 | 11,124 | ||||||
Same store NOI |
$ | 1,073,605 | $ | 1,081,827 | ||||
For properties that the Operating Partnership acquired prior to January 1, 2010 and
expects to continue to own through December 31, 2011, the Operating Partnership anticipates the
following same store results for the full year ending December 31, 2011:
2011 Same Store Assumptions | ||
Physical occupancy |
95.0% | |
Revenue change |
4.0% to 5.0% | |
Expense change |
1.0% to 2.0% | |
NOI change |
5.0% to 7.5% |
The Operating Partnership anticipates consolidated rental acquisitions of $1.0 billion
and consolidated rental dispositions of $1.25 billion and expects that acquisitions will
have a 1.25% lower cap rate than dispositions for the full year ending December 31, 2011.
These 2011 assumptions are based on current expectations and are forward-looking.
Non-same store operating results increased approximately $84.6 million and consist primarily
of properties acquired in calendar years 2009 and 2010, as well as operations from the Operating
Partnerships completed development properties and corporate housing business. While the operations
of the non-same store assets have been negatively impacted during the year ended December 31, 2010
similar to the same store assets, the non-same store assets have contributed a greater percentage
of total NOI to the Operating Partnerships overall operating results primarily due to increasing
occupancy for properties in lease-up and a longer ownership period in 2010 than 2009. This increase
primarily resulted from:
| Development and other miscellaneous properties in lease-up of $32.4 million; | ||
| Newly stabilized development and other miscellaneous properties of $0.2 million; | ||
| Properties acquired in 2009 and 2010 of $56.2 million; and | ||
| Partially offset by an allocation of property management costs not included in same store results and operating activities from other miscellaneous operations, such as the Operating Partnerships corporate housing business. |
See also Note 19 in the Notes to Consolidated Financial Statements for additional discussion
regarding the Operating Partnerships segment disclosures.
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Fee and asset management revenues, net of fee and asset management expenses, increased
approximately $1.5 million or 53.4% primarily due to an increase in revenue earned on management of
the Operating Partnerships military housing ventures at Fort Lewis and McChord Air Force Base, as
well as a decrease in asset management expenses, partially offset by the unwinding of the Operating
Partnerships institutional joint ventures during 2010 (see Note 6 in the Notes to Consolidated
Financial Statements for further discussion).
Property management expenses from continuing operations include off-site expenses associated
with the self-management of the Operating Partnerships properties as well as management fees paid
to any third party management companies. These expenses increased approximately $9.2 million or
12.8%. This increase is primarily attributable to an increase in payroll-related costs (due
primarily to higher health insurance and bonus costs, acceleration of long-term
compensation expense for retirement eligible employees and the creation of the Operating
Partnerships central business group, which moved administrative functions off-site), legal and
professional fees, education/conference expenses, real estate tax consulting fees and travel
expenses.
Depreciation expense from continuing operations, which includes depreciation on non-real
estate assets, increased approximately $97.4 million or 17.4% primarily as a result of additional
depreciation expense on properties acquired in 2009 and 2010, development properties placed in
service and capital expenditures for all properties owned.
General and administrative expenses from continuing operations, which include corporate
operating expenses, increased approximately $0.9 million or 2.3% primarily due to higher overall
payroll-related costs (due primarily to higher bonus costs), partially offset by lower tax
compliance fees and office rents. The Operating Partnership anticipates that general and
administrative expenses will approximate $40.0 million to $42.0 million for the year ending
December 31, 2011. The above assumption is based on current expectations and is forward-looking.
Impairment from continuing operations increased approximately $34.3 million due to a $45.4
million impairment charge taken during the fourth quarter of 2010 on land held for development
related to two potential development projects compared to an $11.1 million impairment charge taken
during 2009 on land held for development. See Note 20 in the Notes to Consolidated Financial
Statements for further discussion.
Interest and other income from continuing operations decreased approximately $11.1 million or
67.0% primarily as a result of a decrease in interest earned on cash and cash equivalents and
investment securities due to lower interest rates during the year ended December 31, 2010 and lower
overall balances as well as gains on debt extinguishment and the sale of investment securities
recognized during the year ended December 31, 2009 that did not reoccur in 2010, partially offset
by an increase in insurance/litigation settlement proceeds. The Operating Partnership anticipates
that interest and other income will approximate $2.0 million to $3.0 million for the year ending
December 31, 2011. The above assumption is based on current expectations and is forward-looking.
Other expenses from continuing operations increased approximately $5.4 million or 83.9%
primarily due to an increase in the expensing of overhead (pursuit cost write-offs) as a result of
the Operating Partnerships decision to reduce its development activities in prior periods as well
as an increase in property acquisition costs incurred in conjunction with the Operating
Partnerships significantly higher acquisition volume in 2010.
Interest expense from continuing operations, including amortization of deferred financing
costs, decreased approximately $27.8 million or 5.5% primarily as a result of lower overall debt
balances and higher debt extinguishment costs due to the significant debt repurchases in 2009 and
lower rates in 2010, partially offset by interest expense on the $500.0 million mortgage pool that
closed in 2009, the $600.0 million of unsecured notes that closed in July 2010 and lower
capitalized interest. During the year ended December 31, 2010, the Operating Partnership
capitalized interest costs of approximately $13.0 million as compared to $34.9 million for the year
ended December 31, 2009. This capitalization of interest primarily relates to consolidated projects
under development. The effective interest cost on all indebtedness for the year ended December 31,
2010 was 5.14% as compared to 5.62% for the year ended December 31, 2009. The Operating Partnership
anticipates that interest expense (excluding debt extinguishment costs and convertible debt
discounts) will approximate $470.0 million to $480.0 million for the year ending December 31, 2011.
The above assumption is based on current expectations and is forward-looking.
Income and other tax expense from continuing operations decreased approximately $2.5 million
or 88.1% primarily due to a decrease in franchise taxes for Texas and a decrease in business taxes
for Washington, D.C. The Operating Partnership anticipates that income and other tax expense will
approximate $0.5 million to $1.5 million for the year ending December 31, 2011. The above
assumption is based on current expectations and is forward-looking.
Loss from investments in unconsolidated entities decreased approximately $2.1 million or 73.9%
as compared to the year ended December 31, 2009 primarily due to the Operating Partnerships $1.8
million share of
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defeasance costs incurred in conjunction with the extinguishment of
cross-collateralized mortgage debt on one of the Operating
Partnerships partially owned unconsolidated joint ventures taken during the year ended December
31, 2009 that did not reoccur in 2010.
Net gain on sales of unconsolidated entities increased approximately $17.4 million primarily
due to larger gains on sale and revaluation of seven previously unconsolidated properties that were
acquired from the Operating Partnerships joint venture partner and the gain on sale for 27
properties sold during the year ended December 31, 2010 compared with unconsolidated properties
sold in the same period in 2009.
Net loss on sales of land parcels increased approximately $1.4 million primarily due to the
loss on sale of one land parcel during the year ended December 31, 2010.
Discontinued operations, net decreased approximately $63.3 million or 16.7% between the
periods under comparison. This decrease is primarily due to lower gains from property sales during
the year ended December 31, 2010 compared to the same period in 2009 and the operations of those
properties. In addition, properties sold in 2010 reflect operations for none of or a partial period
in 2010 in contrast to a full or partial period in 2009. See Note 13 in the Notes to Consolidated
Financial Statements for further discussion.
Comparison of the year ended December 31, 2009 to the year ended December 31, 2008
For the year ended December 31, 2009, the Operating Partnership reported diluted earnings per
Unit of $1.27 compared to $1.46 per Unit for the year ended December 31, 2008. The difference is
primarily due to the following:
| $57.6 million in lower net gains on sales of discontinued operations in 2009 vs. 2008; | ||
| $84.0 million in lower property NOI in 2009 vs. 2008, primarily driven by $51.6 million in lower same store NOI and dilution from transaction activities, partially offset by higher NOI contributions from lease-up properties; and | ||
| Partially offset by $105.3 million in lower impairment losses in 2009 vs. 2008. |
For the year ended December 31, 2009, income from continuing operations increased
approximately $43.0 million when compared to the year ended December 31, 2008. The increase in
continuing operations is discussed below.
Revenues from the 2009 Same Store Properties decreased $52.4 million primarily as a result of
a decrease in average rental rates charged to residents and a decrease in occupancy. Expenses from
the 2009 Same Store Properties decreased $0.8 million primarily due to lower property management
costs, partially offset by higher real estate taxes and utility costs. The following tables provide
comparative same store results and statistics for the 2009 Same Store Properties:
2009 vs. 2008
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) 113,598 Same Store Units
Same Store Results/Statistics
$ in thousands (except for Average Rental Rate) 113,598 Same Store Units
Results | Statistics | |||||||||||||||||||||||
Average | ||||||||||||||||||||||||
Rental | ||||||||||||||||||||||||
Description | Revenues | Expenses | NOI | Rate (1) | Occupancy | Turnover | ||||||||||||||||||
2009 |
$ | 1,725,774 | $ | 644,294 | $ | 1,081,480 | $ | 1,352 | 93.8 | % | 61.0 | % | ||||||||||||
2008 |
$ | 1,778,183 | $ | 645,123 | $ | 1,133,060 | $ | 1,383 | 94.5 | % | 63.7 | % | ||||||||||||
Change |
$ | (52,409 | ) | $ | (829 | ) | $ | (51,580 | ) | $ | (31 | ) | (0.7 | %) | (2.7 | %) | ||||||||
Change |
(2.9 | %) | (0.1 | %) | (4.6 | %) | (2.2 | %) |
(1) | Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. |
The following table provides comparative same store operating expenses for the 2009 Same
Store Properties:
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2009 vs. 2008
Same Store Operating Expenses
$ in thousands 113,598 Same Store Units
Same Store Operating Expenses
$ in thousands 113,598 Same Store Units
% of Actual | ||||||||||||||||||||
2009 | ||||||||||||||||||||
Actual | Actual | $ | % | Operating | ||||||||||||||||
2009 | 2008 | Change | Change | Expenses | ||||||||||||||||
Real estate taxes |
$ | 173,113 | $ | 171,234 | $ | 1,879 | 1.1 | % | 26.9 | % | ||||||||||
On-site payroll (1) |
155,912 | 156,601 | (689 | ) | (0.4 | %) | 24.2 | % | ||||||||||||
Utilities (2) |
100,184 | 99,045 | 1,139 | 1.1 | % | 15.5 | % | |||||||||||||
Repairs and maintenance (3) |
94,556 | 95,142 | (586 | ) | (0.6 | %) | 14.7 | % | ||||||||||||
Property management costs (4) |
63,854 | 67,126 | (3,272 | ) | (4.9 | %) | 9.9 | % | ||||||||||||
Insurance |
21,689 | 20,890 | 799 | 3.8 | % | 3.4 | % | |||||||||||||
Leasing and advertising |
15,664 | 15,043 | 621 | 4.1 | % | 2.4 | % | |||||||||||||
Other on-site operating expenses (5) |
19,322 | 20,042 | (720 | ) | (3.6 | %) | 3.0 | % | ||||||||||||
Same store operating expenses |
$ | 644,294 | $ | 645,123 | $ | (829 | ) | (0.1 | %) | 100.0 | % | |||||||||
(1) | On-site payroll Includes payroll and related expenses for on-site personnel including property managers, leasing consultants and maintenance staff. | |
(2) | Utilities Represents gross expenses prior to any recoveries under the Resident Utility Billing System (RUBS). Recoveries are reflected in rental income. | |
(3) | Repairs and maintenance Includes general maintenance costs, unit turnover costs including interior painting, routine landscaping, security, exterminating, fire protection, snow removal, elevator, roof and parking lot repairs and other miscellaneous building repair costs. | |
(4) | Property management costs Includes payroll and related expenses for departments, or portions of departments, that directly support on-site management. These include such departments as regional and corporate property management, property accounting, human resources, training, marketing and revenue management, procurement, real estate tax, property legal services and information technology. | |
(5) | Other on-site operating expenses Includes administrative costs such as office supplies, telephone and data charges and association and business licensing fees. |
Non-same store operating results increased approximately $34.3 million or 79.4% and
consist primarily of properties acquired in calendar years 2008 and 2009, as well as operations
from the Operating Partnerships completed development properties and our corporate housing
business. While the operations of the non-same store assets have been negatively impacted during
the year ended December 31, 2009 similar to the same store assets, the non-same store assets have
contributed a greater percentage of total NOI to the Operating Partnerships overall operating
results primarily due to increasing occupancy for properties in lease-up and a longer ownership
period in 2009 than 2008. This increase primarily resulted from:
| Development and other miscellaneous properties in lease-up of $22.4 million; | ||
| Newly stabilized development and other miscellaneous properties of $1.6 million; | ||
| Properties acquired in 2008 and 2009 of $11.9 million; and | ||
| Partially offset by operating activities from other miscellaneous operations. |
See also Note 19 in the Notes to Consolidated Financial Statements for additional discussion
regarding the Operating Partnerships segment disclosures.
Fee and asset management revenues, net of fee and asset management expenses, increased
approximately $0.1 million or 3.4% primarily due to an increase in revenue earned on management of
the Operating Partnerships military housing ventures at Fort Lewis and McChord Air Force Base, as
well as a decrease in asset management expenses. As of December 31, 2009 and 2008, the Operating
Partnership managed 12,681 apartment units and 14,485 apartment units, respectively, primarily for
unconsolidated entities and its military housing ventures at Fort Lewis and McChord.
Property management expenses from continuing operations include off-site expenses associated
with the self-management of the Operating Partnerships properties as well as management fees paid
to any third party management companies. These expenses decreased approximately $5.1 million or
6.7%. This decrease is primarily attributable to lower overall payroll-related costs as a result of
a decrease in the number of properties in the Operating Partnerships portfolio, as well as
decreases in temporary help/contractors, telecommunications and travel expenses.
Depreciation expense from continuing operations, which includes depreciation on non-real
estate assets, increased approximately $23.0 million or 4.3% primarily as a result of additional
depreciation expense on properties acquired in 2008 and 2009, development properties placed in
service and capital expenditures for all properties owned.
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General and administrative expenses from continuing operations, which include corporate
operating expenses, decreased approximately $6.0 million or 13.3% primarily due to lower overall
payroll-related costs as a result of a decrease in the number of properties in the Operating
Partnerships portfolio, as well as a $2.9 million decrease in severance related costs in 2009 and
a decrease in tax consulting costs.
Impairment from continuing operations decreased approximately $105.3 million due to an $11.1
million impairment charge taken during 2009 on a land parcel held for development compared to a
$116.4 million impairment charge taken in the fourth quarter of 2008 on land held for development
related to five potential development projects that are no longer being pursued. See Note 20 in the
Notes to Consolidated Financial Statements for further discussion.
Interest and other income from continuing operations decreased approximately $16.8 million or
50.3% primarily as a result of an $18.7 million gain recognized during 2008 related to the partial
debt extinguishment of the Operating Partnerships notes compared to a $4.5 million gain recognized
in 2009 (see Note 9). In addition, interest earned on cash and cash equivalents decreased due to a
decrease in interest rates and because the Operating Partnership received less insurance/litigation
settlement proceeds and forfeited deposits in 2009, partially offset by a $4.9 million gain on the
sale of investment securities realized in 2009.
Other expenses from continuing operations increased approximately $0.7 million or 12.6%
primarily due to an increase in transaction costs incurred in conjunction with the Operating
Partnerships acquisition of two properties consisting of 566 apartment units from unaffiliated
parties, as well as expensing transaction costs associated with the Operating Partnerships
acquisition of all of its partners interests in five previously partially owned properties
consisting of 1,587 apartment units in 2009.
Interest expense from continuing operations, including amortization of deferred financing
costs, increased approximately $16.9 million or 3.4% primarily as a result of an increase in debt
extinguishment costs and lower capitalized interest. During the year ended December 31, 2009, the
Operating Partnership capitalized interest costs of approximately $34.9 million as compared to
$60.1 million for the year ended December 31, 2008. This capitalization of interest primarily
relates to consolidated projects under development. The effective interest cost on all indebtedness
for the year ended December 31, 2009 was 5.62% as compared to 5.56% for the year ended December 31,
2008.
Income and other tax expense from continuing operations decreased approximately $2.5 million
or 46.9% primarily due to a change in the estimate for Texas state taxes and lower overall state
income taxes, partially offset by an increase in business taxes for Washington, D.C.
Loss from investments in unconsolidated entities increased approximately $2.7 million as
compared to the year ended December 31, 2008 primarily due to the Operating Partnerships $1.8
million share of defeasance costs incurred in conjunction with the extinguishment of
cross-collateralized mortgage debt on one of the Operating Partnerships partially owned
unconsolidated joint ventures as well as a decline in the operating performance of these
properties.
Net gain on sales of unconsolidated entities increased approximately $7.8 million as the
Operating Partnership sold seven unconsolidated properties in 2009 (inclusive of the one property
where the Operating Partnership acquired its partners interest) compared to three unconsolidated
properties in 2008.
Net gain on sales of land parcels decreased approximately $3.0 million due to the sale of
vacant land located in Florida during the year ended December 31, 2008 versus no land sales in
2009.
Discontinued operations, net decreased approximately $97.4 million or 20.4% between the
periods under comparison. This decrease is primarily due to lower gains from property sales during
the year ended December 31, 2009 compared to the same period in 2008 and the operations of those
properties. In addition, properties sold in 2009 reflect operations for a partial period in 2009
in contrast to a full period in 2008. See Note 13 in the Notes to Consolidated Financial
Statements for further discussion.
Liquidity and Capital Resources
For the Year Ended December 31, 2010
As of January 1, 2010, the Operating Partnership had approximately $193.3 million of cash and
cash equivalents, its restricted 1031 exchange proceeds totaled $244.3 million and it had $1.37
billion available under its
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revolving credit facility (net of $56.7 million which was
restricted/dedicated to support letters of credit and $75.0 million which had been committed by a
now bankrupt financial institution and is not available for borrowing). After taking into effect
the various transactions discussed in the following paragraphs and the net cash provided by
operating activities, the Operating Partnerships cash and cash equivalents balance at December 31,
2010 was approximately $431.4 million, its restricted 1031 exchange proceeds totaled $103.9 million
and the amount available on the Operating Partnerships revolving credit facility was $1.28 billion
(net of $147.3 million which was restricted/dedicated to support letters of credit and net of the
$75.0 million discussed above).
During the year ended December 31, 2010, the Operating Partnership generated proceeds from
various transactions, which included the following:
| Disposed of 35 consolidated properties, 27 unconsolidated properties, 2 condominium units and one land parcel, receiving net proceeds of approximately $699.6 million; | ||
| Obtained $173.6 million in new mortgage financing; | ||
| Issued $600.0 million of unsecured notes receiving net proceeds of $595.4 million before underwriting fees and other expenses; and | ||
| Issued approximately 8.8 million Units (including EQR Common Shares issued under EQRs ATM program see further discussion below) and received net proceeds of $406.2 million. | ||
During the year ended December 31, 2010, the above proceeds were primarily utilized to: | |||
| Acquire 16 rental properties and six land parcels for approximately $1.2 billion; | ||
| Acquire the 75% equity interest it did not own in seven previously unconsolidated properties consisting of 1,811 apartment units in exchange for an approximate $26.9 million payment to its joint venture partner (net of $3.1 million in cash acquired); | ||
| Invest $131.3 million primarily in development projects; | ||
| Repurchase 58,130 OP Units, utilizing cash of $1.9 million (see Note 3); | ||
| Repay $652.1 million of mortgage loans; and | ||
| Settle a forward starting swap, utilizing cash of $10.0 million. |
In September 2009, EQR announced the establishment of an At-The-Market (ATM) share offering
program which would allow EQR to sell up to 17.0 million Common Shares from time to time over the
next three years into the existing trading market at current market prices as well as through
negotiated transactions. Per the terms of ERPOPs partnership agreement, EQR contributes the net
proceeds from all equity offerings to the capital of the Operating Partnership in exchange for
additional OP Units (on a one-for-one Common Share per OP Unit basis). EQR may, but shall have no
obligation to, sell Common Shares through the ATM share offering program in amounts and at times to
be determined by EQR. Actual sales will depend on a variety of factors to be determined by EQR from
time to time, including (among others) market conditions, the trading price of EQRs Common Shares
and determinations of the appropriate sources of funding for EQR. During the year ended December
31, 2010, EQR issued approximately 6.2 million Common Shares at an average price of $47.45 per
share for total consideration of approximately $291.9 million through the ATM share offering
program. During the year ended December 31, 2009, EQR issued approximately 3.5 million Common
Shares at an average price of $35.38 per share for total consideration of approximately $123.7
million through the ATM share offering program. In addition, during the first quarter of 2011
through January 13, 2011, EQR has issued approximately 3.0 million Common Shares at an average
price of $50.84 per share for total consideration of approximately $154.5 million. EQR has not
issued any shares under this program since January 13, 2011. Through February 16, 2011, EQR has
cumulatively issued approximately 12.7 million Common Shares at an average price of $44.94 per share for
total consideration of approximately $570.1 million. Including its recently filed prospectus
supplement which added 5,687,478 Common Shares, EQR has 10.0 million Common Shares remaining
available for issuance under the ATM program.
Depending on its analysis of market prices, economic conditions and other opportunities for
the investment of available capital, EQR may repurchase its Common Shares pursuant to its existing
share repurchase program authorized by the Board of Trustees. EQR repurchased $1.9 million (58,130
shares at an average price per share of $32.46) of its Common Shares (all related to the vesting of
employee restricted shares) during the year ended December 31, 2010. Concurrent with these
transactions, the Operating Partnership repurchased and retired 58,130 OP Units previously issued
to EQR. As of December 31, 2010, EQR had authorization to repurchase an additional $464.6 million
of its shares. See Note 3 in the Notes to Consolidated Financial Statements for further discussion.
Depending on its analysis of prevailing market conditions, liquidity requirements, contractual
restrictions and other factors, the Operating Partnership may from time to time seek to repurchase
and retire its outstanding debt in open market or privately negotiated transactions.
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The Operating Partnerships total debt summary and debt maturity schedules as of December 31,
2010 are as follows:
Debt Summary as of December 31, 2010
(Amounts in thousands)
(Amounts in thousands)
Weighted | ||||||||||||||||
Weighted | Average | |||||||||||||||
Average | Maturities | |||||||||||||||
Amounts (1) | % of Total | Rates (1) | (years) | |||||||||||||
Secured |
$ | 4,762,896 | 47.9 | % | 4.79 | % | 8.1 | |||||||||
Unsecured |
5,185,180 | 52.1 | % | 4.96 | % | 4.5 | ||||||||||
Total |
$ | 9,948,076 | 100.0 | % | 4.88 | % | 6.2 | |||||||||
Fixed Rate Debt: |
||||||||||||||||
Secured Conventional |
$ | 3,831,393 | 38.5 | % | 5.68 | % | 6.9 | |||||||||
Unsecured Public/Private |
4,375,860 | 44.0 | % | 5.78 | % | 5.1 | ||||||||||
Fixed Rate Debt |
8,207,253 | 82.5 | % | 5.73 | % | 5.9 | ||||||||||
Floating Rate Debt: |
||||||||||||||||
Secured Conventional |
326,009 | 3.3 | % | 2.56 | % | 0.7 | ||||||||||
Secured Tax Exempt |
605,494 | 6.1 | % | 0.48 | % | 20.4 | ||||||||||
Unsecured Public/Private |
809,320 | 8.1 | % | 1.72 | % | 1.3 | ||||||||||
Unsecured Revolving Credit Facility |
| | 0.66 | % | 1.2 | |||||||||||
Floating Rate Debt |
1,740,823 | 17.5 | % | 1.39 | % | 7.5 | ||||||||||
Total |
$ | 9,948,076 | 100.0 | % | 4.88 | % | 6.2 | |||||||||
(1) | Net of the effect of any derivative instruments. Weighted average rates are for the year ended December 31, 2010. |
Note: The Operating Partnership capitalized interest of approximately $13.0 million and $34.9
million during the years ended December 31, 2010 and 2009, respectively.
Debt Maturity Schedule as of December 31, 2010
(Amounts in thousands)
(Amounts in thousands)
Weighted Average | Weighted Average | |||||||||||||||||||||||
Fixed | Floating | Rates on Fixed | Rates on | |||||||||||||||||||||
Year | Rate (1) | Rate (1) | Total | % of Total | Rate Debt (1) | Total Debt (1) | ||||||||||||||||||
2011 |
$ | 906,266 | (2) | $ | 759,725 | (3) | $ | 1,665,991 | 16.8 | % | 5.28 | % | 3.49 | % | ||||||||||
2012 |
778,181 | 38,128 | 816,309 | 8.2 | % | 5.65 | % | 5.57 | % | |||||||||||||||
2013 |
269,159 | 309,828 | 578,987 | 5.8 | % | 6.72 | % | 4.89 | % | |||||||||||||||
2014 |
562,583 | 22,034 | 584,617 | 5.9 | % | 5.31 | % | 5.24 | % | |||||||||||||||
2015 |
357,713 | | 357,713 | 3.6 | % | 6.40 | % | 6.40 | % | |||||||||||||||
2016 |
1,167,662 | | 1,167,662 | 11.7 | % | 5.33 | % | 5.33 | % | |||||||||||||||
2017 |
1,355,830 | 456 | 1,356,286 | 13.6 | % | 5.87 | % | 5.87 | % | |||||||||||||||
2018 |
80,763 | 44,677 | 125,440 | 1.3 | % | 5.72 | % | 4.28 | % | |||||||||||||||
2019 |
801,754 | 20,766 | 822,520 | 8.3 | % | 5.49 | % | 5.36 | % | |||||||||||||||
2020 |
1,671,836 | 809 | 1,672,645 | 16.8 | % | 5.50 | % | 5.50 | % | |||||||||||||||
2021+ |
255,506 | 544,400 | 799,906 | 8.0 | % | 6.62 | % | 2.67 | % | |||||||||||||||
Total |
$ | 8,207,253 | $ | 1,740,823 | $ | 9,948,076 | 100.0 | % | 5.63 | % | 4.93 | % | ||||||||||||
(1) | Net of the effect of any derivative instruments. Weighted average rates are as of December 31, 2010. | |
(2) | Includes $482.5 million face value of 3.85% convertible unsecured debt with a final maturity of 2026. The notes are callable by the Operating Partnership on or after August 18, 2011. The notes are putable by the holders on August 18, 2011, August 15, 2016 and August 15, 2021. | |
(3) | Includes the Operating Partnerships $500.0 million term loan facility, which originally matured on October 5, 2010. Effective April 12, 2010, the Operating Partnership exercised the first of its two one-year extension options. As a result, the maturity date is now October 5, 2011 and there is one remaining one-year extension option exercisable by the Operating Partnership. |
The following table provides a summary of the Operating Partnerships unsecured debt as
of December 31,
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2010:
Unsecured Debt Summary as of December 31, 2010
(Amounts in thousands)
(Amounts in thousands)
Unamortized | ||||||||||||||||||||
Coupon | Due | Face | Premium/ | Net | ||||||||||||||||
Rate | Date | Amount | (Discount) | Balance | ||||||||||||||||
Fixed Rate Notes: |
||||||||||||||||||||
6.950 | % | 03/02/11 | $ | 93,096 | $ | 205 | $ | 93,301 | ||||||||||||
6.625 | % | 03/15/12 | 253,858 | (229 | ) | 253,629 | ||||||||||||||
5.500 | % | 10/01/12 | 222,133 | (383 | ) | 221,750 | ||||||||||||||
5.200 | % | 04/01/13 | (1) | 400,000 | (266 | ) | 399,734 | |||||||||||||
Fair Value Derivative Adjustments |
(1 | ) | (300,000 | ) | | (300,000 | ) | |||||||||||||
5.250 | % | 09/15/14 | 500,000 | (228 | ) | 499,772 | ||||||||||||||
6.584 | % | 04/13/15 | 300,000 | (469 | ) | 299,531 | ||||||||||||||
5.125 | % | 03/15/16 | 500,000 | (278 | ) | 499,722 | ||||||||||||||
5.375 | % | 08/01/16 | 400,000 | (1,036 | ) | 398,964 | ||||||||||||||
5.750 | % | 06/15/17 | 650,000 | (3,306 | ) | 646,694 | ||||||||||||||
7.125 | % | 10/15/17 | 150,000 | (441 | ) | 149,559 | ||||||||||||||
4.750 | % | 07/15/20 | 600,000 | (4,349 | ) | 595,651 | ||||||||||||||
7.570 | % | 08/15/26 | 140,000 | | 140,000 | |||||||||||||||
3.850 | % | 08/15/26 | (2) | 482,545 | (4,992 | ) | 477,553 | |||||||||||||
4,391,632 | (15,772 | ) | 4,375,860 | |||||||||||||||||
Floating Rate Notes: |
||||||||||||||||||||
04/01/13 | (1) | 300,000 | | 300,000 | ||||||||||||||||
Fair Value Derivative Adjustments |
(1) | 9,320 | | 9,320 | ||||||||||||||||
Term Loan Facility |
LIBOR+0.50% | 10/05/11 | (3) (4) | 500,000 | | 500,000 | ||||||||||||||
809,320 | | 809,320 | ||||||||||||||||||
Revolving Credit Facility: |
LIBOR+0.50% | 02/28/12 | (3) (5) | | | | ||||||||||||||
Total Unsecured Debt |
$ | 5,200,952 | $ | (15,772 | ) | $ | 5,185,180 | |||||||||||||
(1) | $300.0 million in fair value interest rate swaps converts a portion of the 5.200% notes due April 1, 2013 to a floating interest rate. | |
(2) | Convertible notes mature on August 15, 2026. The notes are callable by the Operating Partnership on or after August 18, 2011. The notes are putable by the holders on August 18, 2011, August 15, 2016 and August 15, 2021. | |
(3) | Facilities are private. All other unsecured debt is public. | |
(4) | Represents the Operating Partnerships $500.0 million term loan facility, which originally matured on October 5, 2010. Effective April 12, 2010, the Operating Partnership exercised the first of its two one-year extension options. As a result, the maturity date is now October 5, 2011 and there is one remaining one-year extension option exercisable by the Operating Partnership. | |
(5) | As of December 31, 2010, there was approximately $1.28 billion available on the Operating Partnerships unsecured revolving credit facility. |
An unlimited amount of equity and debt securities remains available for issuance by EQR
and the Operating Partnership under effective shelf registration statements filed with the SEC.
Most recently, EQR and the Operating Partnership filed a universal shelf registration statement for
an unlimited amount of equity and debt securities that became automatically effective upon filing
with the SEC in October 2010 (under SEC regulations enacted in 2005, the registration statement
automatically expires on October 14, 2013 and does not contain a maximum issuance amount). However,
as of February 16, 2011, issuances under the ATM share offering program are limited to 10.0 million
additional shares. Per the terms of ERPOPs partnership agreement, EQR contributes the net proceeds
of all equity offerings to the capital of the Operating Partnership in exchange for additional OP
Units (on a one-for-one Common Share per OP Unit basis) or preference units (on a one-for-one
preferred share per preference unit basis).
The Operating Partnerships Consolidated Debt-to-Total Market Capitalization Ratio as of
December 31, 2010 is presented in the following table. The Operating Partnership calculates the
equity component of its market capitalization as the sum of (i) the total outstanding Units at the
equivalent market value of the closing price of EQRs Common Shares on the New York Stock Exchange
and (ii) the liquidation value of all perpetual preference units outstanding.
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Capital Structure as of December 31, 2010
(Amounts in thousands except for unit and per unit amounts)
(Amounts in thousands except for unit and per unit amounts)
Secured Debt |
$ | 4,762,896 | 47.9 | % | ||||||||||||
Unsecured Debt |
5,185,180 | 52.1 | % | |||||||||||||
Total Debt |
9,948,076 | 100.0 | % | 38.4 | % | |||||||||||
Total outstanding Units |
303,809,279 | |||||||||||||||
EQR Common Share Price at December 31, 2010 |
$ | 51.95 | ||||||||||||||
15,782,892 | 98.7 | % | ||||||||||||||
Perpetual Preference Units (see below) |
200,000 | 1.3 | % | |||||||||||||
Total Equity |
15,982,892 | 100.0 | % | 61.6 | % | |||||||||||
Total Market Capitalization |
$ | 25,930,968 | 100.0 | % |
Perpetual Preference Units as of December 31, 2010
(Amounts in thousands except for unit and per unit amounts)
(Amounts in thousands except for unit and per unit amounts)
Annual | Annual | Weighted | ||||||||||||||||||||||
Redemption | Outstanding | Liquidation | Dividend | Dividend | Average | |||||||||||||||||||
Series | Date | Units | Value | Per Unit | Amount | Rate | ||||||||||||||||||
Preference Units: |
||||||||||||||||||||||||
8.29% Series K |
12/10/26 | 1,000,000 | $ | 50,000 | $ | 4.145 | $ | 4,145 | ||||||||||||||||
6.48% Series N |
6/19/08 | 600,000 | 150,000 | 16.20 | 9,720 | |||||||||||||||||||
Total Perpetual Preference Units |
1,600,000 | $ | 200,000 | $ | 13,865 | 6.93 | % |
On November 1, 2010, the Operating Partnership redeemed its Series E and Series H
Cumulative Convertible Preference Units for cash consideration of $0.8 million and 355,539 Units.
The Operating Partnership generally expects to meet its short-term liquidity requirements,
including capital expenditures related to maintaining its existing properties and certain scheduled
unsecured note and mortgage note repayments, through its working capital, net cash provided by
operating activities and borrowings under its revolving credit facility. Under normal operating
conditions, the Operating Partnership considers its cash provided by operating activities to be
adequate to meet operating requirements and payments of distributions. However, there may be times
when the Operating Partnership experiences shortfalls in its coverage of distributions, which may
cause the Operating Partnership to consider reducing its distributions and/or using the proceeds
from property dispositions or additional financing transactions to make up the difference. Should
these shortfalls occur for lengthy periods of time or be material in nature, the Operating
Partnerships financial condition may be adversely affected and it may not be able to maintain its
current distribution levels. The Operating Partnership reduced its quarterly OP Unit dividend
beginning with the dividend for the third quarter of 2009, from $0.4825 per Unit to $0.3375 per
Unit.
During the fourth quarter of 2010, EQR announced a new dividend policy
which it believes will generate payouts more closely aligned with the actual annual operating
results of the Operating Partnerships core business and provide transparency to investors.
EQR and the Operating Partnership intend to pay an annual cash dividend equal to approximately 65% of
Normalized FFO. During the year ended December 31, 2010, the Operating Partnership paid $0.3375
per Unit for each of the first three quarters and $0.4575 per Unit for the fourth quarter to bring
the total payment for the year (an annual rate of $1.47 per Unit) to approximately 65% of
Normalized FFO. The Operating Partnership anticipates the expected dividend payout will be $1.56
to $1.62 per Unit ($0.3375 per Unit for each of the first three quarters with the balance for the
fourth quarter) for the year ending December 31, 2011. The above assumption is based on current
expectations and is forward-looking. While the new dividend policy makes it less likely that the
Operating Partnership will over distribute, it will also lead to a dividend reduction more quickly
than in the past should operating results deteriorate. The Operating Partnership believes that its
expected 2011 operating cash flow will be sufficient to cover capital expenditures and
distributions.
The Operating Partnership also expects to meet its long-term liquidity requirements, such as
scheduled unsecured note and mortgage debt maturities, property acquisitions, financing of
construction and development activities and capital improvements through the issuance of secured
and unsecured debt and equity securities, including additional OP Units, and proceeds received from
the disposition of certain properties as well as joint
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ventures. In addition, the Operating
Partnership has significant unencumbered properties available to secure additional mortgage
borrowings in the event that the public capital markets are unavailable or the cost of alternative
sources of capital is too high. The fair value of and cash flow from these unencumbered properties
are in excess of the requirements the Operating Partnership must maintain in order to comply with
covenants under its unsecured notes and line of credit. Of the $19.7 billion in investment in real
estate on the Operating Partnerships balance sheet at December 31, 2010, $12.6 billion or 63.9%,
was unencumbered. However, there can be no assurances that these sources of capital will be
available to the Operating Partnership in the future on acceptable terms or otherwise.
The Operating Partnerships credit ratings from Standard & Poors (S&P), Moodys and Fitch
for its outstanding senior debt are BBB+, Baal and BBB+, respectively. EQRs equity ratings from
S&P, Moodys and Fitch for its outstanding preferred equity are BBB+, Baa2 and BBB-, respectively.
During the fourth quarter of 2010, Fitch downgraded the Operating Partnerships credit rating from
A- to BBB+ and EQRs equity rating from BBB+ to BBB-, which does not have an effect on the
Operating Partnerships cost of funds. During the first quarter of 2011, Moodys raised its
outlook for both EQR and the Operating Partnership from negative outlook to stable outlook.
The Operating Partnership has a $1.425 billion (net of $75.0 million which had been committed
by a now bankrupt financial institution and is not available for borrowing) long-term revolving
credit facility with available borrowings as of February 16, 2011 of $1.34 billion (net of $83.8
million which was restricted/dedicated to support letters of credit and net of the $75.0 million
discussed above) that matures in February 2012 (See Note 10 in the Notes to Consolidated Financial
Statements for further discussion). This facility may, among other potential uses, be used to fund
property acquisitions, costs for certain properties under development and short-term liquidity
requirements.
On July 16, 2010, a portion of the parking garage collapsed at one of the Operating
Partnerships rental properties (Prospect Towers in Hackensack, New Jersey). The Operating
Partnership estimates that the costs related to such collapse (both expensed and capitalized),
including providing for residents interim needs, lost revenue and garage reconstruction, will be
approximately $12.0 million, after insurance reimbursements of $8.0 million. Costs to rebuild the
garage will be capitalized as incurred. Other costs, like those to accommodate displaced
residents, lost revenue due to a portion of the property being temporarily unavailable for
occupancy and legal costs, will reduce earnings as they are incurred. Generally, insurance
proceeds will be recorded as increases to earnings as they are received. An impairment charge of
$1.3 million was recognized to write-off the net book value of the collapsed garage. During the
year ended December 31, 2010, the Operating Partnership received approximately $4.0 million in
insurance proceeds which fully offset the impairment charge and partially offset expenses of $5.5
million that were recorded relating to this loss and are included in real estate taxes and
insurance on the consolidated statements of operations. In addition, the Operating Partnership
estimates that its lost revenues approximated $1.6 million during the year ended December 31, 2010
as a result of the high-rise tower being unoccupied following the garage collapse.
See Note 20 in the Notes to Consolidated Financial Statements for discussion of the events
which occurred subsequent to December 31, 2010.
Capitalization of Fixed Assets and Improvements to Real Estate
Our policy with respect to capital expenditures is generally to capitalize expenditures that
improve the value of the property or extend the useful life of the component asset of the property.
We track improvements to real estate in two major categories and several subcategories:
| Replacements (inside the unit). These include: |
| flooring such as carpets, hardwood, vinyl, linoleum or tile; | ||
| appliances; | ||
| mechanical equipment such as individual furnace/air units, hot water heaters, etc; | ||
| furniture and fixtures such as kitchen/bath cabinets, light fixtures, ceiling fans, sinks, tubs, toilets, mirrors, countertops, etc; and | ||
| blinds/shades. |
All replacements are depreciated over a five-year estimated useful life. We expense as
incurred all make-ready maintenance and turnover costs such as cleaning, interior painting of
individual apartment units and the repair of any replacement item noted above.
| Building improvements (outside the unit). These include: |
| roof replacement and major repairs; | ||
| paving or major resurfacing of parking lots, curbs and sidewalks; | ||
| amenities and common areas such as pools, exterior sports and playground equipment, lobbies, |
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clubhouses, laundry rooms, alarm and security systems and offices; | |||
| major building mechanical equipment systems; | ||
| interior and exterior structural repair and exterior painting and siding; | ||
| major landscaping and grounds improvement; and | ||
| vehicles and office and maintenance equipment. |
All building improvements are depreciated over a five to ten-year estimated useful life. We
capitalize building improvements and upgrades only if the item: (i) exceeds $2,500 (selected
projects must exceed $10,000); (ii) extends
the useful life of the asset; and (iii) improves the value of the asset.
For the year ended December 31, 2010, our actual improvements to real estate totaled
approximately $138.2 million. This includes the following (amounts in thousands except for
apartment unit and per apartment unit amounts):
Capital Expenditures to Real Estate
For the Year Ended December 31, 2010
For the Year Ended December 31, 2010
Total | Avg. Per | Avg. Per | Avg. Per | |||||||||||||||||||||||||
Apartment | Apartment | Building | Apartment | Apartment | ||||||||||||||||||||||||
Units (1) | Replacements (2) | Unit | Improvements | Unit | Total | Unit | ||||||||||||||||||||||
Same Store Properties (3) |
112,042 | $ | 70,620 | $ | 630 | $ | 54,118 | $ | 483 | $ | 124,738 | $ | 1,113 | |||||||||||||||
Non-Same Store Properties (4) |
12,824 | 4,180 | 457 | 5,547 | 607 | 9,727 | 1,064 | |||||||||||||||||||||
Other (5) |
| 1,509 | 2,234 | 3,743 | ||||||||||||||||||||||||
Total |
124,866 | $ | 76,309 | $ | 61,899 | $ | 138,208 | |||||||||||||||||||||
(1) | Total Apartment Units Excludes 4,738 military housing apartment units for which repairs and maintenance expenses and capital expenditures to real estate are self-funded and do not consolidate into the Operating Partnerships results. | |
(2) | Replacements Includes new expenditures inside the apartment units such as appliances, mechanical equipment, fixtures and flooring, including carpeting. Replacements for same store properties also include $31.7 million spent in 2010 on apartment unit renovations/rehabs (primarily kitchens and baths) on 4,331 apartment units (equating to about $7,300 per apartment unit rehabbed) designed to reposition these assets for higher rental levels in their respective markets. | |
(3) | Same Store Properties Primarily includes all properties acquired or completed and stabilized prior to January 1, 2009, less properties subsequently sold. | |
(4) | Non-Same Store Properties Primarily includes all properties acquired during 2009 and 2010, plus any properties in lease-up and not stabilized as of January 1, 2009. Per unit amounts are based on a weighted average of 9,141 apartment units. | |
(5) | Other Primarily includes expenditures for properties sold during the period. |
For the year ended December 31, 2009, our actual improvements to real estate totaled
approximately $123.9 million. This includes the following (amounts in thousands except for
apartment unit and per apartment unit amounts):
Capital Expenditures to Real Estate
For the Year Ended December 31, 2009
For the Year Ended December 31, 2009
Total | Avg. Per | Avg. Per | Avg. Per | |||||||||||||||||||||||||
Apartment | Apartment | Building | Apartment | Apartment | ||||||||||||||||||||||||
Units (1) | Replacements (2) | Unit | Improvements | Unit | Total | Unit | ||||||||||||||||||||||
Same Store Properties (3) |
113,598 | $ | 69,808 | $ | 614 | $ | 44,611 | $ | 393 | $ | 114,419 | $ | 1,007 | |||||||||||||||
Non-Same Store Properties (4) |
10,728 | 2,361 | 240 | 3,675 | 374 | 6,036 | 614 | |||||||||||||||||||||
Other (5) |
| 2,130 | 1,352 | 3,482 | ||||||||||||||||||||||||
Total |
124,326 | $ | 74,299 | $ | 49,638 | $ | 123,937 | |||||||||||||||||||||
(1) | Total Apartment Units Excludes 8,086 unconsolidated apartment units and 4,595 military housing apartment units, for which capital expenditures to real estate are self-funded and do not consolidate into the Operating Partnerships results. | |
(2) | Replacements For same store properties includes $28.0 million spent on various assets related to unit renovations/rehabs (primarily kitchens and baths) designed to reposition these assets for higher rental levels in their respective markets. | |
(3) | Same Store Properties Primarily includes all properties acquired or completed and stabilized prior to January 1, 2008, less properties subsequently sold. | |
(4) | Non-Same Store Properties Primarily includes all properties acquired during 2008 and 2009, plus any properties in lease-up and not stabilized as of January 1, 2008. Per unit amounts are based on a weighted average of 9,823 apartment units. | |
(5) | Other Primarily includes expenditures for properties sold during the period. |
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For 2011, the Operating Partnership estimates that it will spend approximately $1,200 per
apartment unit of capital expenditures for its same store properties inclusive of unit
renovation/rehab costs, or $850 per apartment unit excluding unit renovation/rehab costs. For
2011, the Operating Partnership estimates that it will spend $41.0 million rehabbing 5,500
apartment units (equating to about $7,500 per apartment unit rehabbed). The above assumptions are
based on current expectations and are forward-looking.
During the year ended December 31, 2010, the Operating Partnerships total non-real estate
capital additions, such as computer software, computer equipment, and furniture and fixtures and
leasehold improvements to the Operating Partnerships property management offices and its corporate
offices, were approximately $3.0 million. The Operating Partnership expects to fund approximately
$8.5 million in total additions to non-real estate property in 2011. The above assumption is based
on current expectations and is forward-looking.
Improvements to real estate and additions to non-real estate property are generally funded
from net cash provided by operating activities and from investment cash flow.
Derivative Instruments
In the normal course of business, the Operating Partnership is exposed to the effect of
interest rate changes. The Operating Partnership seeks to manage these risks by following
established risk management policies and procedures including the use of derivatives to hedge
interest rate risk on debt instruments.
The Operating Partnership has a policy of only entering into contracts with major financial
institutions based upon their credit ratings and other factors. When viewed in conjunction with the
underlying and offsetting exposure that the derivatives are designed to hedge, the Operating
Partnership has not sustained a material loss from these instruments nor does it anticipate any
material adverse effect on its net income or financial position in the future from the use of
derivatives it currently has in place.
See Note 11 in the Notes to Consolidated Financial Statements for additional discussion of
derivative instruments at December 31, 2010.
Other
Total distributions paid in January 2011 amounted to $141.3 million (excluding distributions
on Partially Owned Properties), which included certain distributions declared during the fourth
quarter ended December 31, 2010.
Off-Balance Sheet Arrangements and Contractual Obligations
The Operating Partnership had co-invested in various properties that were unconsolidated and
accounted for under the equity method of accounting. Management does not believe these investments
had a materially different impact upon the Operating Partnerships liquidity, cash flows, capital
resources, credit or market risk than its other property management and ownership activities.
During 2000 and 2001, the Operating Partnership entered into institutional ventures with an
unaffiliated partner. At the respective closing dates, the Operating Partnership sold and/or
contributed 45 properties containing 10,846 apartment units to these ventures and retained a 25%
ownership interest in the ventures. The Operating Partnerships joint venture partner contributed
cash equal to 75% of the agreed-upon equity value of the properties comprising the ventures, which
was then distributed to the Operating Partnership. The Operating Partnerships strategy with
respect to these ventures was to reduce its concentration of properties in a variety of markets.
As of December 31, 2010, the Operating Partnership had sold its interest in these unconsolidated
ventures with the exception of eight properties consisting of 2,061 apartment units which were
acquired by the Operating Partnership. All of the related debt encumbering these ventures was
extinguished.
As of December 31, 2010, the Operating Partnership has four projects totaling 717 apartment
units in various stages of development with estimated completion dates ranging through September
30, 2012, as well as other completed development projects that are in various stages of lease up or
are stabilized. The development agreements currently in place are discussed in detail in Note 18 of
the Operating Partnerships Consolidated Financial Statements.
See also Notes 2 and 6 in the Notes to Consolidated Financial Statements for additional
discussion regarding the Operating Partnerships investments in partially owned entities.
The following table summarizes the Operating Partnerships contractual obligations for the
next five years and thereafter as of December 31, 2010:
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Payments Due by Year (in thousands) | ||||||||||||||||||||||||||||
Contractual Obligations | 2011 | 2012 | 2013 | 2014 | 2015 | Thereafter | Total | |||||||||||||||||||||
Debt: |
||||||||||||||||||||||||||||
Principal (a) |
$ | 1,665,991 | $ | 816,309 | $ | 578,987 | $ | 584,617 | $ | 357,713 | $ | 5,944,459 | $ | 9,948,076 | ||||||||||||||
Interest (b) |
460,045 | 407,793 | 367,642 | 344,599 | 309,043 | 1,016,041 | 2,905,163 | |||||||||||||||||||||
Operating Leases: |
||||||||||||||||||||||||||||
Minimum Rent Payments (c) |
5,478 | 4,285 | 4,431 | 4,736 | 4,729 | 320,928 | 344,587 | |||||||||||||||||||||
Other Long-Term Liabilities: |
||||||||||||||||||||||||||||
Deferred Compensation (d) |
1,457 | 1,770 | 1,485 | 1,677 | 1,677 | 9,182 | 17,248 | |||||||||||||||||||||
Total |
$ | 2,132,971 | $ | 1,230,157 | $ | 952,545 | $ | 935,629 | $ | 673,162 | $ | 7,290,610 | $ | 13,215,074 | ||||||||||||||
(a) | Amounts include aggregate principal payments only and includes in 2011 a $500.0 million term loan that the Operating Partnership has the right to extend to 2012. | |
(b) | Amounts include interest expected to be incurred on the Operating Partnerships secured and unsecured debt based on obligations outstanding at December 31, 2010 and inclusive of capitalized interest. For floating rate debt, the current rate in effect for the most recent payment through December 31, 2010 is assumed to be in effect through the respective maturity date of each instrument. | |
(c) | Minimum basic rent due for various office space the Operating Partnership leases and fixed base rent due on ground leases for four properties/parcels. | |
(d) | Estimated payments to EQRs Chairman, Vice Chairman and two former CEOs based on planned retirement dates. |
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States requires management to use judgment in the application of accounting
policies, including making estimates and assumptions. If our judgment or interpretation of the
facts and circumstances relating to various transactions had been different or different
assumptions were made, it is possible that different accounting policies would have been applied,
resulting in different financial results or different presentation of our financial statements.
The Operating Partnerships significant accounting policies are described in Note 2 in the
Notes to Consolidated Financial Statements. These policies were followed in preparing the
consolidated financial statements at and for the year ended December 31, 2010 and are consistent
with the year ended December 31, 2009.
The Operating Partnership has identified five significant accounting policies as critical
accounting policies. These critical accounting policies are those that have the most impact on the
reporting of our financial condition and those requiring significant judgments and estimates. With
respect to these critical accounting policies, management believes that the application of
judgments and estimates is consistently applied and produces financial information that fairly
presents the results of operations for all periods presented. The five critical accounting policies
are:
Acquisition of Investment Properties
The Operating Partnership allocates the purchase price of properties to net tangible and
identified intangible assets acquired based on their fair values. In making estimates of fair
values for purposes of allocating purchase price, the Operating Partnership utilizes a number of
sources, including independent appraisals that may be obtained in connection with the acquisition
or financing of the respective property, our own analysis of recently acquired and existing
comparable properties in our portfolio and other market data. The Operating Partnership also
considers information obtained about each property as a result of its pre-acquisition due
diligence, marketing and leasing activities in estimating the fair value of the tangible and
intangible assets acquired.
Impairment of Long-Lived Assets
The Operating Partnership periodically evaluates its long-lived assets, including its
investments in real estate, for indicators of impairment. The judgments regarding the existence of
impairment indicators are based on factors such as operational performance, market conditions and
legal and environmental concerns, as well as the Operating Partnerships ability to hold and its
intent with regard to each asset. Future events could occur which would cause the Operating
Partnership to conclude that impairment indicators exist and an impairment loss is warranted.
Depreciation of Investment in Real Estate
The Operating Partnership depreciates the building component of its investment in real estate
over a 30-year estimated useful life, building improvements over a 5-year to 10-year estimated
useful life and both the furniture,
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fixtures and equipment and replacements components over a 5-year estimated useful life, all of
which are judgmental determinations.
Cost Capitalization
See the Capitalization of Fixed Assets and Improvements to Real Estate section for a
discussion of the Operating Partnerships policy with respect to capitalization vs. expensing of
fixed asset/repair and maintenance costs. In addition, the Operating Partnership capitalizes an
allocation of the payroll and associated costs of employees directly responsible for and who spend
all of their time on the supervision of major capital and/or renovation projects. These costs are
reflected on the balance sheet as an increase to depreciable property.
For all development projects, the Operating Partnership uses its professional judgment in
determining whether such costs meet the criteria for capitalization or must be expensed as
incurred. The Operating Partnership capitalizes interest, real estate taxes and insurance and
payroll and associated costs for those individuals directly responsible for and who spend all of
their time on development activities, with capitalization ceasing no later than 90 days following
issuance of the certificate of occupancy. These costs are reflected on the balance sheet as
construction-in-progress for each specific property. The Operating Partnership expenses as incurred
all payroll costs of on-site employees working directly at our properties, except as noted above on
our development properties prior to certificate of occupancy issuance and on specific major
renovations at selected properties when additional incremental employees are hired.
Fair Value of Financial Instruments, Including Derivative Instruments
The valuation of financial instruments requires the Operating Partnership to make estimates
and judgments that affect the fair value of the instruments. The Operating Partnership, where
possible, bases the fair values of its financial instruments, including its derivative instruments,
on listed market prices and third party quotes. Where these are not available, the Operating
Partnership bases its estimates on current instruments with similar terms and maturities or on
other factors relevant to the financial instruments.
Funds From Operations and Normalized Funds From Operations
For the year ended December 31, 2010, Funds From Operations (FFO) available to Units and
Normalized FFO available to Units increased $7.3 million, or 1.2%, and $20.9 million, or 3.2%,
respectively, as compared to the year ended December 31, 2009. For the year ended December 31,
2009, FFO available to Units and Normalized FFO available to Units decreased $2.9 million, or 0.5%,
and $73.5 million, or 10.0%, respectively, as compared to the year ended December 31, 2008.
The following is a reconciliation of net income to FFO available to Units and Normalized FFO
available to Units for each of the five years ended December 31, 2010:
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Funds From Operations and Normalized Funds From Operations
(Amounts in thousands)
(Amounts in thousands)
Year Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Net income |
$ | 295,983 | $ | 382,029 | $ | 436,413 | $ | 1,047,356 | $ | 1,147,617 | ||||||||||
Adjustments: |
||||||||||||||||||||
Net (income) loss attributable to Noncontrolling Interests
Partially Owned Properties |
726 | 558 | (2,650 | ) | (2,200 | ) | (3,132 | ) | ||||||||||||
Depreciation |
656,633 | 559,271 | 536,283 | 509,358 | 429,737 | |||||||||||||||
Depreciation Non-real estate additions |
(6,788 | ) | (7,355 | ) | (8,269 | ) | (8,279 | ) | (7,840 | ) | ||||||||||
Depreciation Partially Owned and Unconsolidated Properties |
(1,619 | ) | 759 | 4,157 | 4,379 | 4,338 | ||||||||||||||
Net (gain) on sales of unconsolidated entities |
(28,101 | ) | (10,689 | ) | (2,876 | ) | (2,629 | ) | (370 | ) | ||||||||||
Discontinued operations: |
||||||||||||||||||||
Depreciation |
16,770 | 41,104 | 66,625 | 107,056 | 162,780 | |||||||||||||||
Net (gain) on sales of discontinued operations |
(297,956 | ) | (335,299 | ) | (392,857 | ) | (933,013 | ) | (1,025,803 | ) | ||||||||||
Net incremental gain (loss) on sales of condominium units |
1,506 | (385 | ) | (3,932 | ) | 20,771 | 48,961 | |||||||||||||
FFO (1) (3) |
637,154 | 629,993 | 632,894 | 742,799 | 756,288 | |||||||||||||||
Adjustments: |
||||||||||||||||||||
Asset impairment and valuation allowances |
45,380 | 11,124 | 116,418 | | 30,000 | |||||||||||||||
Property acquisition costs and write-off of pursuit costs (other expenses) |
11,928 | 6,488 | 5,760 | 1,830 | 4,661 | |||||||||||||||
Debt extinguishment (gains) losses, including prepayment penalties,
preference unit redemptions and non-cash convertible debt
discounts |
8,594 | 34,333 | (2,784 | ) | 24,004 | 21,563 | ||||||||||||||
(Gains) losses on sales of non-operating assets, net of income and other
tax expense (benefit) |
(80 | ) | (5,737 | ) | (979 | ) | (34,450 | ) | (48,592 | ) | ||||||||||
Other miscellaneous non-comparable items |
(6,186 | ) | (171 | ) | (1,725 | ) | (5,767 | ) | (20,880 | ) | ||||||||||
Normalized FFO (2) (3) |
$ | 696,790 | $ | 676,030 | $ | 749,584 | $ | 728,416 | $ | 743,040 | ||||||||||
FFO (1) (3) |
$ | 637,154 | $ | 629,993 | $ | 632,894 | $ | 742,799 | $ | 756,288 | ||||||||||
Preferred distributions |
(14,368 | ) | (14,488 | ) | (14,522 | ) | (23,233 | ) | (39,115 | ) | ||||||||||
Premium on redemption of preference units |
| | | (6,154 | ) | (4,649 | ) | |||||||||||||
FFO available to Units (1) (3) (4) |
$ | 622,786 | $ | 615,505 | $ | 618,372 | $ | 713,412 | $ | 712,524 | ||||||||||
Normalized FFO (2) (3) |
$ | 696,790 | $ | 676,030 | $ | 749,584 | $ | 728,416 | $ | 743,040 | ||||||||||
Preferred distributions |
(14,368 | ) | (14,488 | ) | (14,522 | ) | (23,233 | ) | (39,115 | ) | ||||||||||
Premium on redemption of preference units |
| | | (6,154 | ) | (4,649 | ) | |||||||||||||
Normalized FFO available to Units (2) (3) (4) |
$ | 682,422 | $ | 661,542 | $ | 735,062 | $ | 699,029 | $ | 699,276 | ||||||||||
(1) | The National Association of Real Estate Investment Trusts (NAREIT) defines funds from operations (FFO) (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States (GAAP)), excluding gains (or losses) from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. The April 2002 White Paper states that gain or loss on sales of property is excluded from FFO for previously depreciated operating properties only. Once the Operating Partnership commences the conversion of apartment units to condominiums, it simultaneously discontinues depreciation of such property. | |
(2) | Normalized funds from operations (Normalized FFO) begins with FFO and excludes: |
| the impact of any expenses relating to asset impairment and valuation allowances; | ||
| property acquisition and other transaction costs related to mergers and acquisitions and pursuit cost write-offs (other expenses); | ||
| gains and losses from early debt extinguishment, including prepayment penalties, preference unit redemptions and the cost related to the implied option value of non-cash convertible debt discounts; | ||
| gains and losses on the sales of non-operating assets, including gains and losses from land parcel and condominium sales, net of the effect of income tax benefits or expenses; and | ||
| other miscellaneous non-comparable items. |
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(3) | The Operating Partnership believes that FFO and FFO available to Units are helpful to investors as supplemental measures of the operating performance of a real estate company, because they are recognized measures of performance by the real estate industry and by excluding gains or losses related to dispositions of depreciable property and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO available to Units can help compare the operating performance of a companys real estate between periods or as compared to different companies. The Operating Partnership also believes that Normalized FFO and Normalized FFO available to Units are helpful to investors as supplemental measures of the operating performance of a real estate company because they allow investors to compare the Operating Partnerships operating performance to its performance in prior reporting periods and to the operating performance of other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Operating Partnerships actual operating results. FFO, FFO available to Units, Normalized FFO and Normalized FFO available to Units do not represent net income, net income available to Units or net cash flows from operating activities in accordance with GAAP. Therefore, FFO, FFO available to Units, Normalized FFO and Normalized FFO available to Units should not be exclusively considered as alternatives to net income, net income available to Units or net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Operating Partnerships calculation of FFO, FFO available to Units, Normalized FFO and Normalized FFO available to Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies. | |
(4) | FFO available to Units and Normalized FFO available to Units are calculated on a basis consistent with net income available to Units and reflects adjustments to net income for preferred distributions and premiums on redemption of preference units in accordance with accounting principles generally accepted in the United States. |
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Market risks relating to the Operating Partnerships financial instruments result primarily
from changes in short-term LIBOR interest rates and changes in the SIFMA index for tax-exempt debt.
The Operating Partnership does not have any direct foreign exchange or other significant market
risk.
The Operating Partnerships exposure to market risk for changes in interest rates relates
primarily to the unsecured revolving and term credit facilities as well as floating rate tax-exempt
debt. The Operating Partnership typically incurs fixed rate debt obligations to finance
acquisitions while it typically incurs floating rate debt obligations to finance working capital
needs and as a temporary measure in advance of securing long-term fixed rate financing. The
Operating Partnership continuously evaluates its level of floating rate debt with respect to total
debt and other factors, including its
assessment of the current and future economic environment. To the extent the Operating
Partnership carries substantial cash balances, this will tend to partially counterbalance any
increase or decrease in interest rates.
The Operating Partnership also utilizes certain derivative financial instruments to manage
market risk. Interest rate protection agreements are used to convert floating rate debt to a fixed
rate basis or vice versa as well as to partially lock in rates on future debt issuances.
Derivatives are used for hedging purposes rather than speculation. The Operating Partnership does
not enter into financial instruments for trading purposes. See also Note 11 to the Notes to
Consolidated Financial Statements for additional discussion of derivative instruments.
The fair values of the Operating Partnerships financial instruments (including such items in
the financial statement captions as cash and cash equivalents, other assets, lines of credit,
accounts payable and accrued expenses and other liabilities) approximate their carrying or contract
values based on their nature, terms and interest rates that approximate current market rates. The
fair value of the Operating Partnerships mortgage notes payable and unsecured notes were
approximately $4.7 billion and $5.5 billion, respectively, at December 31, 2010.
At December 31, 2010, the Operating Partnership had total outstanding floating rate debt of
approximately $1.7 billion, or 17.5% of total debt, net of the effects of any derivative
instruments. If market rates of interest on all of the floating rate debt permanently increased by
14 basis points (a 10% increase from the Operating Partnerships existing weighted average interest
rates), the increase in interest expense on the floating rate debt would decrease future earnings
and cash flows by approximately $2.4 million. If market rates of interest on all of the floating
rate debt permanently decreased by 14 basis points (a 10% decrease from the Operating Partnerships
existing weighted average interest rates), the decrease in interest expense on the floating rate
debt would increase future earnings and cash flows by approximately $2.4 million.
At December 31, 2010, the Operating Partnership had total outstanding fixed rate debt of
approximately $8.2 billion, or 82.5% of total debt, net of the effects of any derivative
instruments. If market rates of interest permanently increased by 57 basis points (a 10% increase
from the Operating Partnerships existing weighted average interest rates), the estimated fair
value of the Operating Partnerships fixed rate debt would be approximately $7.5 billion. If market
rates of interest permanently decreased by 57 basis points (a 10% decrease from the Operating
Partnerships existing weighted
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average interest rates), the estimated fair value of the Operating
Partnerships fixed rate debt would be approximately $9.1 billion.
At December 31, 2010, the Operating Partnerships derivative instruments had a net liability
fair value of approximately $23.3 million. If market rates of interest permanently increased by 12
basis points (a 10% increase from the Operating Partnerships existing weighted average interest
rates), the net liability fair value of the Operating Partnerships derivative instruments would be
approximately $9.8 million. If market rates of interest permanently decreased by 12 basis points (a
10% decrease from the Operating Partnerships existing weighted average interest rates), the net
liability fair value of the Operating Partnerships derivative instruments would be approximately
$37.0 million.
At December 31, 2009, the Operating Partnership had total outstanding floating rate debt of
approximately $1.8 billion, or 19.7% of total debt, net of the effects of any derivative
instruments. If market rates of interest on all of the floating rate debt permanently increased by
13 basis points (a 10% increase from the Operating Partnerships existing weighted average interest
rates), the increase in interest expense on the floating rate debt would decrease future earnings
and cash flows by approximately $2.4 million. If market rates of interest on all of the floating
rate debt permanently decreased by 13 basis points (a 10% decrease from the Operating Partnerships
existing weighted average interest rates), the decrease in interest expense on the floating rate
debt would increase future earnings and cash flows by approximately $2.4 million.
At December 31, 2009, the Operating Partnership had total outstanding fixed rate debt of
approximately $7.5 billion, or 80.3% of total debt, net of the effects of any derivative
instruments. If market rates of interest permanently increased by 59 basis points (a 10% increase
from the Operating Partnerships existing weighted average interest rates), the estimated fair
value of the Operating Partnerships fixed rate debt would be approximately $6.9 billion. If market
rates of interest permanently decreased by 59 basis points (a 10% decrease from the Operating
Partnerships existing weighted average interest rates), the estimated fair value of the Operating
Partnerships fixed rate debt would be approximately $8.4 billion.
At December 31, 2009, the Operating Partnerships derivative instruments had a net asset fair
value of approximately $25.2 million. If market rates of interest permanently increased by 20 basis
points (a 10% increase from the Operating Partnerships existing weighted average interest rates),
the net asset fair value of the Operating Partnerships derivative instruments would be
approximately $35.5 million. If market rates of interest permanently decreased by 20 basis points
(a 10% decrease from the Operating Partnerships existing weighted average interest rates), the net
asset fair value of the Operating Partnerships derivative instruments would be approximately $15.9
million.
These amounts were determined by considering the impact of hypothetical interest rates on the
Operating Partnerships financial instruments. The foregoing assumptions apply to the entire amount
of the Operating Partnerships debt and derivative instruments and do not differentiate among
maturities. These analyses do not consider the effects of the changes in overall economic activity
that could exist in such an environment. Further, in the event of changes of such magnitude,
management would likely take actions to further mitigate its exposure to the changes. However, due
to the uncertainty of the specific actions that would be taken and their possible effects, this
analysis assumes no changes in the Operating Partnerships financial structure or results.
The Operating Partnership cannot predict the effect of adverse changes in interest rates on
its debt and derivative instruments and, therefore, its exposure to market risk, nor can there be
any assurance that long-term debt will be available at advantageous pricing. Consequently, future
results may differ materially from the estimated adverse changes discussed above.
Item 8. Financial Statements and Supplementary Data
See Index to Consolidated Financial Statements and Schedule on page F-1 of this Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures:
Effective as of December 31, 2010, the Operating Partnership carried out an evaluation, under
the supervision and with the participation of the Operating Partnerships management, including the
Chief Executive Officer and Chief Financial Officer of EQR, of the effectiveness of the Operating
Partnerships disclosure controls
43
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and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15.
Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that
the disclosure controls and procedures are effective to ensure that information required to be
disclosed by the Operating Partnership in its Exchange Act filings is recorded, processed,
summarized and reported within the time periods specified in the SECs rules and forms.
(b) Managements Report on Internal Control over Financial Reporting:
ERP Operating Limited Partnerships management is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under
the Exchange Act. Under the supervision and with the participation of management, including the
Chief Executive Officer and Chief Financial Officer of the Operating Partnerships general partner,
management conducted an evaluation of the effectiveness of internal control over financial
reporting based on the framework in Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
Because of its inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Therefore, even those systems determined to be effective can only provide
reasonable assurance with respect to financial statement preparation and presentation.
Based on the Operating Partnerships evaluation under the framework in Internal Control
Integrated Framework, management concluded that its internal control over financial reporting was
effective as of December 31, 2010. Our internal control over financial reporting has been audited
as of December 31, 2010 by Ernst & Young LLP, an independent registered public accounting firm, as
stated in their report which is included herein.
(c) Changes in Internal Control over Financial Reporting:
There were no changes to the internal control over financial reporting of the Operating
Partnership identified in connection with the Operating Partnerships evaluation referred to above
that occurred during the fourth quarter of 2010 that have materially affected, or are reasonably
likely to materially affect, the Operating Partnerships internal control over financial reporting.
Item 9B. Other Information
None.
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PART III
Items 10, 11, 12, 13 and 14.
Trustees, Executive Officers and Corporate Governance; Executive Compensation; Security Ownership
of Certain Beneficial Owners and Management and Related Stockholder Matters; Certain Relationships
and Related Transactions, and Trustee Independence; and Principal Accounting Fees and Services.
The information required by Item 10, Item 11, Item 12, Item 13 and Item 14 is incorporated by
reference to, and will be contained in, EQRs Proxy Statement, which EQR intends to file no later
than 120 days after the end of its fiscal year ended December 31, 2010. EQR is the general partner
of and owns an approximate 95.5% ownership interest in ERPOP.
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PART IV
Item 15. Exhibits and Financial Statement Schedules.
(a) | The following documents are filed as part of this Report: |
(1) | Financial Statements: See Index to Consolidated Financial Statements and Schedule on page F-1 of this Form 10-K. | ||
(2) | Exhibits: See the Exhibit Index. | ||
(3) | Financial Statement Schedules: See Index to Consolidated Financial Statements and Schedule on page F-1 of this Form 10-K. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
ERP OPERATING LIMITED PARTNERSHIP BY: EQUITY RESIDENTIAL ITS GENERAL PARTNER |
||||
By: | /s/ David J. Neithercut | |||
David J. Neithercut, | ||||
President and Chief Executive Officer | ||||
Date: February 24, 2011 |
||||
Table of Contents
EQUITY RESIDENTIAL
ERP OPERATING LIMITED PARTNERSHIP
ERP OPERATING LIMITED PARTNERSHIP
POWER OF ATTORNEY
KNOW ALL MEN/WOMEN BY THESE PRESENTS, that each person whose signature appears below,
hereby constitutes and appoints David J. Neithercut, Mark J. Parrell and Ian S. Kaufman, or any of
them, his or her attorneys-in-fact and agents, with full power of substitution and resubstitution
for him or her in any and all capacities, to do all acts and things which said attorneys and
agents, or any of them, deem advisable to enable the company to comply with the Securities Exchange
Act of 1934, as amended, and any requirements or regulations of the Securities and Exchange
Commission in respect thereof, in connection with the companys filing of an annual report on Form
10-K for the companys fiscal year 2010, including specifically, but without limitation of the
general authority hereby granted, the power and authority to sign his or her name as a trustee or
officer, or both, of the company, as indicated below opposite his or her signature, to the Form
10-K, and any amendment thereto; and each of the undersigned does hereby fully ratify and confirm
all that said attorneys and agents, or any of them, or the substitute of any of them, shall do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the capacities set forth
below and on the dates indicated:
Name | Title | Date | ||
/s/ David J. Neithercut
|
President, Chief Executive Officer and Trustee | February 24, 2011 | ||
David J. Neithercut |
||||
/s/ Mark J. Parrell
|
Executive Vice President and Chief Financial Officer | February 24, 2011 | ||
Mark J. Parrell |
||||
/s/ Ian S. Kaufman
|
Senior Vice President and Chief Accounting Officer | February 24, 2011 | ||
Ian S. Kaufman |
||||
/s/ John W. Alexander
|
Trustee | February 24, 2011 | ||
John W. Alexander |
||||
/s/ Charles L. Atwood
|
Trustee | February 24, 2011 | ||
Charles L. Atwood |
||||
/s/ Linda Walker Bynoe
|
Trustee | February 24, 2011 | ||
Linda Walker Bynoe |
||||
/s/ John E. Neal
|
Trustee | February 24, 2011 | ||
John E. Neal |
||||
/s/ Mark S. Shapiro
|
Trustee | February 24, 2011 | ||
Mark S. Shapiro |
||||
/s/ B. Joseph White
|
Trustee | February 24, 2011 | ||
B. Joseph White |
||||
/s/ Gerald A. Spector
|
Vice Chairman of the Board of Trustees | February 24, 2011 | ||
Gerald A. Spector |
||||
/s/ Samuel Zell
|
Chairman of the Board of Trustees | February 24, 2011 | ||
Samuel Zell |
Table of Contents
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
ERP OPERATING LIMITED PARTNERSHIP
PAGE | ||
FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT |
||
F-2 | ||
F-3 | ||
F-4 | ||
F-5 to F-6 | ||
F-7 to F-9 | ||
F-10 to F-11 | ||
F-12 to F-46 | ||
SCHEDULE FILED AS PART OF THIS REPORT |
||
S-1 to S-11 |
All other schedules have been omitted because they are inapplicable, not required or
the information is included elsewhere in the consolidated financial statements or notes
thereto.
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Partners
ERP Operating Limited Partnership
ERP Operating Limited Partnership
We have audited the accompanying consolidated balance sheets of ERP Operating Limited Partnership
(the Operating Partnership) as of December 31, 2010 and 2009 and the related consolidated
statements of operations, changes in capital and cash flows for each of the three years in the
period ended December 31, 2010. Our audits also included the financial statement schedule listed in
the accompanying index to the consolidated financial statements and schedule. These financial
statements and schedule are the responsibility of the Operating Partnerships management. Our
responsibility is to express an opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of ERP Operating Limited Partnership at
December 31, 2010 and 2009 and the consolidated results of its operations and its cash flows for
each of the three years in the period ended December 31, 2010, in conformity with U.S. generally
accepted accounting principles. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), ERP Operating Limited Partnerships internal control over financial
reporting as of December 31, 2010, based on criteria established in Internal Control Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated February 24, 2011 expressed an unqualified opinion thereon.
/s/ ERNST & YOUNG LLP | ||||
ERNST & YOUNG LLP | ||||
Chicago, Illinois
February 24, 2011
February 24, 2011
F-2
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON INTERNAL CONTROL OVER FINANCIAL REPORTING
ON INTERNAL CONTROL OVER FINANCIAL REPORTING
To the Partners
ERP Operating Limited Partnership
ERP Operating Limited Partnership
We have audited ERP Operating Limited Partnerships (the Operating Partnership) internal control
over financial reporting as of December 31, 2010, based on criteria established in Internal Control
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (the COSO Criteria). ERP Operating Limited Partnerships management is responsible for
maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting included in the accompanying
Managements Report on Internal Control over Financial Reporting. Our responsibility is to express
an opinion on the effectiveness of the Operating Partnerships internal control over financial
reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk,
and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
A companys internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
companys internal control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the company;
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
In our opinion, ERP Operating Limited Partnership maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2010, based on the COSO Criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheets of ERP Operating Limited Partnership as of
December 31, 2010 and 2009 and the related consolidated statements of operations, changes in
capital and cash flows for each of the three years in the period ended December 31, 2010 of ERP
Operating Limited Partnership and our report dated February 24, 2011, expressed an unqualified
opinion thereon.
/s/ ERNST & YOUNG LLP | ||||
ERNST & YOUNG LLP | ||||
Chicago, Illinois
February 24, 2011
February 24, 2011
F-3
Table of Contents
ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
ASSETS |
||||||||
Investment in real estate |
||||||||
Land |
$ | 4,110,275 | $ | 3,650,324 | ||||
Depreciable property |
15,226,512 | 13,893,521 | ||||||
Projects under development |
130,337 | 668,979 | ||||||
Land held for development |
235,247 | 252,320 | ||||||
Investment in real estate |
19,702,371 | 18,465,144 | ||||||
Accumulated depreciation |
(4,337,357 | ) | (3,877,564 | ) | ||||
Investment in real estate, net |
15,365,014 | 14,587,580 | ||||||
Cash and cash equivalents |
431,408 | 193,288 | ||||||
Investments in unconsolidated entities |
3,167 | 6,995 | ||||||
Deposits restricted |
180,987 | 352,008 | ||||||
Escrow deposits mortgage |
12,593 | 17,292 | ||||||
Deferred financing costs, net |
42,033 | 46,396 | ||||||
Other assets |
148,992 | 213,956 | ||||||
Total assets |
$ | 16,184,194 | $ | 15,417,515 | ||||
LIABILITIES AND CAPITAL |
||||||||
Liabilities: |
||||||||
Mortgage notes payable |
$ | 4,762,896 | $ | 4,783,446 | ||||
Notes, net |
5,185,180 | 4,609,124 | ||||||
Lines of credit |
| | ||||||
Accounts payable and accrued expenses |
39,452 | 58,537 | ||||||
Accrued interest payable |
98,631 | 101,849 | ||||||
Other liabilities |
304,202 | 272,236 | ||||||
Security deposits |
60,812 | 59,264 | ||||||
Distributions payable |
140,905 | 100,266 | ||||||
Total liabilities |
10,592,078 | 9,984,722 | ||||||
Commitments and contingencies |
||||||||
Redeemable Limited Partners |
383,540 | 258,280 | ||||||
Capital: |
||||||||
Partners capital: |
||||||||
Preference Units |
200,000 | 208,773 | ||||||
General Partner |
4,948,004 | 4,833,885 | ||||||
Limited Partners |
110,399 | 116,120 | ||||||
Accumulated other comprehensive (loss) income |
(57,818 | ) | 4,681 | |||||
Total partners capital |
5,200,585 | 5,163,459 | ||||||
Noncontrolling Interests Partially Owned Properties |
7,991 | 11,054 | ||||||
Total capital |
5,208,576 | 5,174,513 | ||||||
Total liabilities and capital |
$ | 16,184,194 | $ | 15,417,515 | ||||
See accompanying notes
F-4
Table of Contents
ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands except per Unit data)
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
REVENUES |
||||||||||||
Rental income |
$ | 1,986,043 | $ | 1,846,157 | $ | 1,876,273 | ||||||
Fee and asset management |
9,476 | 10,346 | 10,715 | |||||||||
Total revenues |
1,995,519 | 1,856,503 | 1,886,988 | |||||||||
EXPENSES |
||||||||||||
Property and maintenance |
498,634 | 464,809 | 485,754 | |||||||||
Real estate taxes and insurance |
226,718 | 206,247 | 194,671 | |||||||||
Property management |
81,126 | 71,938 | 77,063 | |||||||||
Fee and asset management |
5,140 | 7,519 | 7,981 | |||||||||
Depreciation |
656,633 | 559,271 | 536,283 | |||||||||
General and administrative |
39,887 | 38,994 | 44,951 | |||||||||
Impairment |
45,380 | 11,124 | 116,418 | |||||||||
Total expenses |
1,553,518 | 1,359,902 | 1,463,121 | |||||||||
Operating income |
442,001 | 496,601 | 423,867 | |||||||||
Interest and other income |
5,469 | 16,585 | 33,337 | |||||||||
Other expenses |
(11,928 | ) | (6,487 | ) | (5,760 | ) | ||||||
Interest: |
||||||||||||
Expense incurred, net |
(470,654 | ) | (496,272 | ) | (482,317 | ) | ||||||
Amortization of deferred financing costs |
(10,369 | ) | (12,566 | ) | (9,647 | ) | ||||||
(Loss) before income and other taxes, (loss) from
investments in unconsolidated entities, net gain (loss) on sales of
unconsolidated entities and land parcels and discontinued operations |
(45,481 | ) | (2,139 | ) | (40,520 | ) | ||||||
Income and other tax (expense) benefit |
(334 | ) | (2,804 | ) | (5,279 | ) | ||||||
(Loss) from investments in unconsolidated entities |
(735 | ) | (2,815 | ) | (107 | ) | ||||||
Net gain on sales of unconsolidated entities |
28,101 | 10,689 | 2,876 | |||||||||
Net (loss) gain on sales of land parcels |
(1,395 | ) | | 2,976 | ||||||||
(Loss) income from continuing operations |
(19,844 | ) | 2,931 | (40,054 | ) | |||||||
Discontinued operations, net |
315,827 | 379,098 | 476,467 | |||||||||
Net income |
295,983 | 382,029 | 436,413 | |||||||||
Net (income) loss attributable to Noncontrolling Interests
Partially Owned Properties |
726 | 558 | (2,650 | ) | ||||||||
Net income attributable to controlling interests |
$ | 296,709 | $ | 382,587 | $ | 433,763 | ||||||
ALLOCATION OF NET INCOME |
||||||||||||
Preference Units |
$ | 14,368 | $ | 14,479 | $ | 14,507 | ||||||
Preference Interests and Junior Preference Units |
$ | | $ | 9 | $ | 15 | ||||||
General Partner |
$ | 269,242 | $ | 347,794 | $ | 393,115 | ||||||
Limited Partners |
13,099 | 20,305 | 26,126 | |||||||||
Net income available to Units |
$ | 282,341 | $ | 368,099 | $ | 419,241 | ||||||
Earnings per Unit basic: |
||||||||||||
(Loss) from continuing operations available to Units |
$ | (0.11 | ) | $ | (0.04 | ) | $ | (0.20 | ) | |||
Net income available to Units |
$ | 0.95 | $ | 1.27 | $ | 1.46 | ||||||
Weighted average Units outstanding |
296,527 | 289,167 | 287,631 | |||||||||
Earnings per Unit diluted: |
||||||||||||
(Loss) from continuing operations available to Untis |
$ | (0.11 | ) | $ | (0.04 | ) | $ | (0.20 | ) | |||
Net income available to Units |
$ | 0.95 | $ | 1.27 | $ | 1.46 | ||||||
Weighted average Units outstanding |
296,527 | 289,167 | 287,631 | |||||||||
See accompanying notes
F-5
Table of Contents
ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
(Amounts in thousands except per Unit data)
CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
(Amounts in thousands except per Unit data)
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Comprehensive income: |
||||||||||||
Net income |
$ | 295,983 | $ | 382,029 | $ | 436,413 | ||||||
Other comprehensive (loss) income derivative instruments: |
||||||||||||
Unrealized holding (losses) gains arising during the year |
(65,894 | ) | 37,676 | (23,815 | ) | |||||||
Losses reclassified into earnings from other
comprehensive income |
3,338 | 3,724 | 2,696 | |||||||||
Other |
| 449 | | |||||||||
Other comprehensive income (loss) other instruments: |
||||||||||||
Unrealized holding gains arising during the year |
57 | 3,574 | 1,202 | |||||||||
(Gains) realized during the year |
| (4,943 | ) | | ||||||||
Comprehensive income |
233,484 | 422,509 | 416,496 | |||||||||
Comprehensive (income) attributable to Noncontrolling Interests
Partially Owned Properties |
726 | 558 | (2,650 | ) | ||||||||
Comprehensive income attributable to controlling interests |
$ | 234,210 | $ | 423,067 | $ | 413,846 | ||||||
See accompanying notes
F-6
Table of Contents
ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||||||
Net income |
$ | 295,983 | $ | 382,029 | $ | 436,413 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||
Depreciation |
673,403 | 600,375 | 602,908 | |||||||||
Amortization of deferred financing costs |
10,406 | 13,127 | 9,701 | |||||||||
Amortization of discounts on investment securities |
| (1,661 | ) | (365 | ) | |||||||
Amortization of discounts and premiums on debt |
(471 | ) | 5,857 | 9,730 | ||||||||
Amortization of deferred settlements on derivative instruments |
2,804 | 2,228 | 1,317 | |||||||||
Impairment |
45,380 | 11,124 | 116,418 | |||||||||
Write-off of pursuit costs |
5,272 | 4,838 | 5,535 | |||||||||
Property acquisition costs |
6,656 | 1,650 | 225 | |||||||||
Loss from investments in unconsolidated entities |
735 | 2,815 | 107 | |||||||||
Distributions from unconsolidated entities return on capital |
61 | 153 | 116 | |||||||||
Net (gain) on sales of investment securities |
| (4,943 | ) | | ||||||||
Net (gain) on sales of unconsolidated entities |
(28,101 | ) | (10,689 | ) | (2,876 | ) | ||||||
Net loss (gain) on sales of land parcels |
1,395 | | (2,976 | ) | ||||||||
Net (gain) on sales of discontinued operations |
(297,956 | ) | (335,299 | ) | (392,857 | ) | ||||||
Loss (gain) on debt extinguishments |
2,457 | 17,525 | (18,656 | ) | ||||||||
Unrealized loss (gain) on derivative instruments |
1 | (3 | ) | 500 | ||||||||
Compensation paid with Company Common Shares |
18,875 | 17,843 | 22,311 | |||||||||
Changes in assets and liabilities: |
||||||||||||
Decrease (increase) in deposits restricted |
3,316 | 3,117 | (1,903 | ) | ||||||||
(Increase) decrease in other assets |
(9,048 | ) | 11,768 | (1,488 | ) | |||||||
(Decrease) in accounts payable and accrued expenses |
(5,454 | ) | (34,524 | ) | (821 | ) | ||||||
(Decrease) in accrued interest payable |
(4,000 | ) | (11,997 | ) | (10,871 | ) | ||||||
Increase (decrease) in other liabilities |
9,972 | 2,220 | (19,412 | ) | ||||||||
Increase (decrease) in security deposits |
1,007 | (5,091 | ) | 2,196 | ||||||||
Net cash provided by operating activities |
732,693 | 672,462 | 755,252 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||||||
Investment in real estate acquisitions |
(1,189,210 | ) | (175,531 | ) | (388,083 | ) | ||||||
Investment in real estate development/other |
(131,301 | ) | (330,623 | ) | (521,546 | ) | ||||||
Improvements to real estate |
(138,208 | ) | (123,937 | ) | (169,838 | ) | ||||||
Additions to non-real estate property |
(2,991 | ) | (2,028 | ) | (2,327 | ) | ||||||
Interest capitalized for real estate under development |
(13,008 | ) | (34,859 | ) | (60,072 | ) | ||||||
Proceeds from disposition of real estate, net |
672,700 | 887,055 | 887,576 | |||||||||
Distributions from unconsolidated entities return of capital |
26,924 | 6,521 | 3,034 | |||||||||
Purchase of investment securities |
| (77,822 | ) | (158,367 | ) | |||||||
Proceeds from sale of investment securities |
25,000 | 215,753 | | |||||||||
Property acquisition costs |
(6,656 | ) | (1,650 | ) | (225 | ) | ||||||
Decrease (increase) in deposits on real estate acquisitions, net |
137,106 | (250,257 | ) | 65,395 | ||||||||
Decrease in mortgage deposits |
4,699 | 2,437 | 445 | |||||||||
Consolidation of previously unconsolidated properties |
(26,854 | ) | | | ||||||||
Deconsolidation of previously consolidated properties |
11,708 | | | |||||||||
Acquisition of Noncontrolling Interests Partially Owned Properties |
(16,023 | ) | (11,480 | ) | (20 | ) | ||||||
Net cash (used for) provided by investing activities |
(646,114 | ) | 103,579 | (344,028 | ) | |||||||
See accompanying notes
F-7
Table of Contents
ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts in thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts in thousands)
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||||||
Loan and bond acquisition costs |
$ | (8,811 | ) | $ | (9,291 | ) | $ | (9,233 | ) | |||
Mortgage notes payable: |
||||||||||||
Proceeds |
173,561 | 738,798 | 1,841,453 | |||||||||
Restricted cash |
73,232 | 46,664 | 37,262 | |||||||||
Lump sum payoffs |
(635,285 | ) | (939,022 | ) | (411,391 | ) | ||||||
Scheduled principal repayments |
(16,769 | ) | (17,763 | ) | (24,034 | ) | ||||||
(Loss) gain on debt extinguishments |
(2,457 | ) | 2,400 | (81 | ) | |||||||
Notes, net: |
||||||||||||
Proceeds |
595,422 | | | |||||||||
Lump sum payoffs |
| (850,115 | ) | (304,043 | ) | |||||||
(Loss) gain on debt extinguishments |
| (19,925 | ) | 18,737 | ||||||||
Lines of credit: |
||||||||||||
Proceeds |
5,513,125 | | 841,000 | |||||||||
Repayments |
(5,513,125 | ) | | (980,000 | ) | |||||||
(Payments on) proceeds from settlement of derivative instruments |
(10,040 | ) | 11,253 | (26,781 | ) | |||||||
Proceeds from sale of OP Units |
329,452 | 86,184 | | |||||||||
Proceeds from EQRs Employee Share Purchase Plan (ESPP) |
5,112 | 5,292 | 6,170 | |||||||||
Proceeds from exercise of EQR options |
71,596 | 9,136 | 24,634 | |||||||||
OP Units repurchased and retired |
(1,887 | ) | (1,124 | ) | (12,548 | ) | ||||||
Redemption of Preference Units |
(877 | ) | | | ||||||||
Payment of offering costs |
(4,657 | ) | (2,536 | ) | (102 | ) | ||||||
Other financing activities, net |
(48 | ) | (16 | ) | (16 | ) | ||||||
Contributions Noncontrolling Interests Partially Owned Properties |
222 | 893 | 2,083 | |||||||||
Contributions Limited Partners |
| 78 | | |||||||||
Distributions: |
||||||||||||
OP Units General Partner |
(379,969 | ) | (488,604 | ) | (522,195 | ) | ||||||
Preference Units |
(14,471 | ) | (14,479 | ) | (14,521 | ) | ||||||
Preference Interests and Junior Preference Units |
| (12 | ) | (15 | ) | |||||||
OP Units Limited Partners |
(18,867 | ) | (28,935 | ) | (34,584 | ) | ||||||
Noncontrolling Interests Partially Owned Properties |
(2,918 | ) | (2,423 | ) | (3,056 | ) | ||||||
Net cash provided by (used for) financing activities |
151,541 | (1,473,547 | ) | 428,739 | ||||||||
Net increase (decrease) in cash and cash equivalents |
238,120 | (697,506 | ) | 839,963 | ||||||||
Cash and cash equivalents, beginning of year |
193,288 | 890,794 | 50,831 | |||||||||
Cash and cash equivalents, end of year |
$ | 431,408 | $ | 193,288 | $ | 890,794 | ||||||
See accompanying notes
F-8
Table of Contents
ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts in thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts in thousands)
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
SUPPLEMENTAL INFORMATION: |
||||||||||||
Cash paid for interest, net of amounts capitalized |
$ | 475,374 | $ | 508,847 | $ | 491,803 | ||||||
Net cash (received) paid for income and other taxes |
$ | (2,740 | ) | $ | 3,968 | $ | (1,252 | ) | ||||
Real estate acquisitions/dispositions/other: |
||||||||||||
Mortgage loans assumed |
$ | 359,082 | $ | | $ | 24,946 | ||||||
Valuation of OP Units issued |
$ | 8,245 | $ | 1,034 | $ | 849 | ||||||
Mortgage loans (assumed) by purchaser |
$ | (39,999 | ) | $ | (17,313 | ) | $ | | ||||
Amortization of deferred financing costs: |
||||||||||||
Investment in real estate, net |
$ | (2,768 | ) | $ | (3,585 | ) | $ | (1,986 | ) | |||
Deferred financing costs, net |
$ | 13,174 | $ | 16,712 | $ | 11,687 | ||||||
Amortization of discounts and premiums on debt: |
||||||||||||
Investment in real estate, net |
$ | | $ | (3 | ) | $ | (6 | ) | ||||
Mortgage notes payable |
$ | (9,208 | ) | $ | (6,097 | ) | $ | (6,287 | ) | |||
Notes, net |
$ | 8,737 | $ | 11,957 | $ | 16,023 | ||||||
Amortization of deferred settlements on derivative instruments: |
||||||||||||
Other liabilities |
$ | (534 | ) | $ | (1,496 | ) | $ | (1,379 | ) | |||
Accumulated other comprehensive income |
$ | 3,338 | $ | 3,724 | $ | 2,696 | ||||||
Unrealized loss (gain) on derivative instruments: |
||||||||||||
Other assets |
$ | 13,019 | $ | (33,261 | ) | $ | (6,680 | ) | ||||
Mortgage notes payable |
$ | (163 | ) | $ | (1,887 | ) | $ | 6,272 | ||||
Notes, net |
$ | 7,497 | $ | 719 | $ | 1,846 | ||||||
Other liabilities |
$ | 45,542 | $ | (3,250 | ) | $ | 22,877 | |||||
Accumulated other comprehensive (loss) income |
$ | (65,894 | ) | $ | 37,676 | $ | (23,815 | ) | ||||
(Payments on) proceeds from settlement of derivative instruments: |
||||||||||||
Other assets |
$ | | $ | 11,253 | $ | (98 | ) | |||||
Other liabilities |
$ | (10,040 | ) | $ | | $ | (26,683 | ) | ||||
Consolidation of previously unconsolidated properties: |
||||||||||||
Investment in real estate, net |
$ | (105,065 | ) | $ | | $ | | |||||
Investments in unconsolidated entities |
$ | 7,376 | $ | | $ | | ||||||
Deposits restricted |
$ | (42,633 | ) | $ | | $ | | |||||
Mortgage notes payable |
$ | 112,631 | $ | | $ | | ||||||
Net other assets recorded |
$ | 837 | $ | | $ | | ||||||
Deconsolidation of previously consolidated properties: |
||||||||||||
Investment in real estate, net |
$ | 14,875 | $ | | $ | | ||||||
Investments in unconsolidated entities |
$ | (3,167 | ) | $ | | $ | | |||||
Other |
||||||||||||
Receivable on sale of OP Units |
$ | 37,550 | $ | | $ | | ||||||
Transfer from notes, net to mortgage notes payable |
$ | 35,600 | $ | | $ | | ||||||
See accompanying notes
F-9
Table of Contents
ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL
(Amounts in thousands)
Year Ended December 31, | ||||||||||||
PARTNERS CAPITAL | 2010 | 2009 | 2008 | |||||||||
PREFERENCE UNITS |
||||||||||||
Balance, beginning of year |
$ | 208,773 | $ | 208,786 | $ | 209,662 | ||||||
Redemption of 7.00% Series E Cumulative Convertible |
(834 | ) | | | ||||||||
Conversion of 7.00% Series E Cumulative Convertible |
(7,378 | ) | (13 | ) | (828 | ) | ||||||
Conversion of 7.00% Series H Cumulative Convertible |
(561 | ) | | (48 | ) | |||||||
Balance, end of year |
$ | 200,000 | $ | 208,773 | $ | 208,786 | ||||||
PREFERENCE INTERESTS AND JUNIOR PREFERENCE UNITS |
||||||||||||
Balance, beginning of year |
$ | | $ | 184 | $ | 184 | ||||||
Conversion of Series B Junior Preference Units |
| (184 | ) | | ||||||||
Balance, end of year |
$ | | $ | | $ | 184 | ||||||
GENERAL PARTNER |
||||||||||||
Balance, beginning of year |
$ | 4,833,885 | $ | 4,732,369 | $ | 4,723,590 | ||||||
OP Unit Issuance: |
||||||||||||
Conversion of Preference Units into OP Units held by General Partner |
7,939 | 13 | 876 | |||||||||
Conversion of OP Units held by Limited Partners into OP Units held by General Partner |
19,722 | 48,803 | 49,901 | |||||||||
Issuance of OP Units |
291,902 | 123,734 | | |||||||||
Exercise of EQR share options |
71,596 | 9,136 | 24,634 | |||||||||
EQRs Employee Share Purchase Plan (ESPP) |
5,112 | 5,292 | 6,170 | |||||||||
Share-based employee compensation expense: |
||||||||||||
EQR performance shares |
| 179 | (8 | ) | ||||||||
EQR restricted shares |
9,781 | 11,132 | 17,278 | |||||||||
EQR share options |
7,421 | 5,996 | 5,846 | |||||||||
EQR ESPP discount |
1,290 | 1,303 | 1,289 | |||||||||
OP Units repurchased and retired |
(1,887 | ) | (1,124 | ) | (7,908 | ) | ||||||
Offering costs |
(4,657 | ) | (2,536 | ) | (102 | ) | ||||||
Net income available to Units General Partner |
269,242 | 347,794 | 393,115 | |||||||||
OP Units General Partner distributions |
(419,320 | ) | (450,287 | ) | (523,648 | ) | ||||||
Supplemental Executive Retirement Plan (SERP) |
8,559 | 27,809 | (7,304 | ) | ||||||||
Acquisition of Noncontrolling Interests Partially Owned Properties |
(16,888 | ) | (1,496 | ) | | |||||||
Change in market value of Redeemable Limited Partners |
(129,918 | ) | (14,544 | ) | 65,524 | |||||||
Adjustment for Limited Partners ownership in Operating Partnership |
(5,775 | ) | (9,688 | ) | (16,884 | ) | ||||||
Balance, end of year |
$ | 4,948,004 | $ | 4,833,885 | $ | 4,732,369 | ||||||
LIMITED PARTNERS |
||||||||||||
Balance, beginning of year |
$ | 116,120 | $ | 137,645 | $ | 162,185 | ||||||
Issuance of OP Units |
8,245 | 1,034 | 849 | |||||||||
Issuance of LTIP Units |
| 78 | | |||||||||
Conversion of OP Units held by Limited Partners into
OP Units held by General Partner |
(19,722 | ) | (48,803 | ) | (49,901 | ) | ||||||
Equity compensation associated with Units Limited Partners |
2,524 | 1,194 | | |||||||||
Net income available to Units Limited Partners |
13,099 | 20,305 | 26,126 | |||||||||
Units Limited Partners distributions |
(20,300 | ) | (25,679 | ) | (33,745 | ) | ||||||
Change in carrying value of Redeemable Limited Partners |
4,658 | 20,658 | 15,247 | |||||||||
Adjustment for Limited Partners ownership in Operating Partnership |
5,775 | 9,688 | 16,884 | |||||||||
Balance, end of year |
$ | 110,399 | $ | 116,120 | $ | 137,645 | ||||||
See accompanying notes
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ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL (Continued)
(Amounts in thousands)
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL (Continued)
(Amounts in thousands)
Year Ended December 31, | ||||||||||||
PARTNERS CAPITAL (continued) | 2010 | 2009 | 2008 | |||||||||
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME |
||||||||||||
Balance, beginning of year |
$ | 4,681 | $ | (35,799 | ) | $ | (15,882 | ) | ||||
Accumulated other comprehensive (loss) income derivative instruments: |
||||||||||||
Unrealized holding (losses) gains arising during the year |
(65,894 | ) | 37,676 | (23,815 | ) | |||||||
Losses reclassified into earnings from other comprehensive income |
3,338 | 3,724 | 2,696 | |||||||||
Other |
| 449 | | |||||||||
Accumulated other comprehensive income (loss) other instruments: |
||||||||||||
Unrealized holding gains arising during the year |
57 | 3,574 | 1,202 | |||||||||
(Gains) realized during the year |
| (4,943 | ) | | ||||||||
Balance, end of year |
$ | (57,818 | ) | $ | 4,681 | $ | (35,799 | ) | ||||
NONCONTROLLING INTERESTS |
||||||||||||
NONCONTROLLING INTERESTS PARTIALLY OWNED PROPERTIES |
||||||||||||
Balance, beginning of year |
$ | 11,054 | $ | 25,520 | $ | 26,236 | ||||||
Net (loss) income attributable to Noncontrolling Interests |
(726 | ) | (558 | ) | 2,650 | |||||||
Contributions by Noncontrolling Interests |
222 | 893 | 2,083 | |||||||||
Distributions to Noncontrolling Interests |
(2,952 | ) | (2,439 | ) | (3,072 | ) | ||||||
Acquisition of Noncontrolling Interests Partially Owned Properties |
175 | (11,705 | ) | (1,877 | ) | |||||||
Other |
218 | (657 | ) | (500 | ) | |||||||
Balance, end of year |
$ | 7,991 | $ | 11,054 | $ | 25,520 | ||||||
See accompanying notes
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ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Business
ERP Operating Limited Partnership (ERPOP), an Illinois limited partnership, was formed in
May 1993 to conduct the multifamily residential property business of Equity Residential (EQR).
EQR, a Maryland real estate investment trust (REIT) formed in March 1993, is an S&P 500 company
focused on the acquisition, development and management of high quality apartment properties in top
United States growth markets. EQR has elected to be taxed as a REIT.
EQR is the general partner of, and as of December 31, 2010 owned an approximate 95.5%
ownership interest in ERPOP. EQR is structured as an umbrella partnership REIT (UPREIT) under
which all property ownership and related business operations are conducted through ERPOP and its
subsidiaries. References to the Operating Partnership include ERPOP and those entities owned or
controlled by it. References to the Company mean EQR and the Operating Partnership.
As of December 31, 2010, the Operating Partnership, directly or indirectly through investments
in title holding entities, owned all or a portion of 451 properties located in 17 states and the
District of Columbia consisting of 129,604 apartment units. The ownership breakdown includes (table
does not include various uncompleted development properties):
Properties | Apartment Units | |||||||
Wholly Owned Properties |
425 | 119,634 | ||||||
Partially Owned Properties Consolidated |
24 | 5,232 | ||||||
Military Housing |
2 | 4,738 | ||||||
451 | 129,604 |
The Wholly Owned Properties are accounted for under the consolidation method of accounting.
The Operating Partnership beneficially owns 100% fee simple title to 422 of the 425 Wholly Owned
Properties and all but one of its wholly owned development properties and land parcels. The
Operating Partnership owns the building and improvements and leases the land underlying the
improvements under long-term ground leases that expire in 2026, 2077 and 2101 for the three
operating properties, respectively, and 2104 for one land parcel. These properties are consolidated
and reflected as real estate assets while the ground leases are accounted for as operating leases.
The Partially Owned Properties Consolidated are controlled by the Operating Partnership
but have partners with noncontrolling interests and are accounted for under the consolidation
method of accounting. The Military Housing properties consist of investments in limited
liability companies that, as a result of the terms of the operating agreements, are accounted for
as management contract rights with all fees recognized as fee and asset management revenue.
2. Summary of Significant Accounting Policies
Basis of Presentation
Due to the Operating Partnerships ability as general partner to control either through
ownership or by contract its subsidiaries, each such subsidiary has been consolidated with the
Operating Partnership for financial reporting purposes, except for an unconsolidated development
land parcel and our military housing properties. The consolidated financial statements also include
all variable interest entities for which the Operating Partnership is the primary beneficiary.
Noncontrolling interests represented by EQRs indirect 1% interest in various entities are
immaterial and have not been accounted for in the Consolidated Financial Statements. In addition,
certain amounts due from EQR for its 1% interests in various entities have not been reflected in
the Consolidated Balance Sheets since such amounts are immaterial.
Real Estate Assets and Depreciation of Investment in Real Estate
Effective for business combinations on or after January 1, 2009, an acquiring entity is
required to recognize all assets acquired and liabilities assumed in a transaction at the
acquisition-date fair value with limited exceptions. In addition, an acquiring entity is required
to expense acquisition-related costs as incurred (amounts are included in the other expenses line
item in the consolidated statements of operations), value noncontrolling interests at fair value at
the
acquisition date and expense restructuring costs associated with an acquired business.
The Operating Partnership allocates the purchase price of properties to net tangible and
identified intangible assets
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acquired based on their fair values. In making estimates of fair values for purposes of
allocating purchase price, the Operating Partnership utilizes a number of sources, including
independent appraisals that may be obtained in connection with the acquisition or financing of the
respective property, our own analysis of recently acquired and existing comparable properties in
our portfolio and other market data. The Operating Partnership also considers information obtained
about each property as a result of its pre-acquisition due diligence, marketing and leasing
activities in estimating the fair value of the tangible and intangible assets acquired. The
Operating Partnership allocates the purchase price of acquired real estate to various components as
follows:
| Land Based on actual purchase price if acquired separately or market research/comparables if acquired with an operating property. | ||
| Furniture, Fixtures and Equipment Ranges between $8,000 and $13,000 per apartment unit acquired as an estimate of the fair value of the appliances and fixtures inside an apartment unit. The per-apartment unit amount applied depends on the type of apartment building acquired. Depreciation is calculated on the straight-line method over an estimated useful life of five years. | ||
| In-Place Leases The Operating Partnership considers the value of acquired in-place leases and the amortization period is the average remaining term of each respective in-place acquired lease. | ||
| Other Intangible Assets The Operating Partnership considers whether it has acquired other intangible assets, including any customer relationship intangibles and the amortization period is the estimated useful life of the acquired intangible asset. | ||
| Building Based on the fair value determined on an as-if vacant basis. Depreciation is calculated on the straight-line method over an estimated useful life of thirty years. |
Replacements inside an apartment unit such as appliances and carpeting are depreciated over a
five-year estimated useful life. Expenditures for ordinary maintenance and repairs are expensed to
operations as incurred and significant renovations and improvements that improve and/or extend the
useful life of the asset are capitalized over their estimated useful life, generally five to ten
years. Initial direct leasing costs are expensed as incurred as such expense approximates the
deferral and amortization of initial direct leasing costs over the lease terms. Property sales or
dispositions are recorded when title transfers to unrelated third parties, contingencies have been
removed and sufficient cash consideration has been received by the Operating Partnership. Upon
disposition, the related costs and accumulated depreciation are removed from the respective
accounts. Any gain or loss on sale is recognized in accordance with accounting principles generally
accepted in the United States.
The Operating Partnership classifies real estate assets as real estate held for disposition
when it is certain a property will be disposed of (see further discussion below).
The Operating Partnership classifies properties under development and/or expansion and
properties in the lease-up phase (including land) as construction-in-progress until construction
has been completed and all certificates of occupancy permits have been obtained.
Impairment of Long-Lived Assets
The Operating Partnership periodically evaluates its long-lived assets, including its
investments in real estate, for indicators of impairment. The judgments regarding the existence of
impairment indicators are based on factors such as operational performance, market conditions and
legal and environmental concerns, as well as the Operating Partnerships ability to hold and its
intent with regard to each asset. Future events could occur which would cause the Operating
Partnership to conclude that impairment indicators exist and an impairment loss is warranted.
For long-lived assets to be held and used, the Operating Partnership compares the expected
future undiscounted cash flows for the long-lived asset against the carrying amount of that asset.
If the sum of the estimated undiscounted cash flows is less than the carrying amount of the asset,
the Operating Partnership would record an impairment loss for the difference between the estimated
fair value and the carrying amount of the asset.
For long-lived assets to be disposed of, an impairment loss is recognized when the estimated
fair value of the asset, less the estimated cost to sell, is less than the carrying amount of the
asset measured at the time that the Operating Partnership has determined it will sell the asset.
Long-lived assets held for disposition and the related liabilities are separately reported, with
the long-lived assets reported at the lower of their carrying amounts or their estimated fair
values, less their costs to sell, and are not depreciated after reclassification to real estate
held for disposition.
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Cost Capitalization
See the Real Estate Assets and Depreciation of Investment in Real Estate section for a
discussion of the Operating Partnerships policy with respect to capitalization vs. expensing of
fixed asset/repair and maintenance costs. In addition, the Operating Partnership capitalizes an
allocation of the payroll and associated costs of employees directly responsible for and who spend
all of their time on the supervision of major capital and/or renovation projects. These costs are
reflected on the balance sheet as an increase to depreciable property.
For all development projects, the Operating Partnership uses its professional judgment in
determining whether such costs meet the criteria for capitalization or must be expensed as
incurred. The Operating Partnership capitalizes interest, real estate taxes and insurance and
payroll and associated costs for those individuals directly responsible for and who spend all of
their time on development activities, with capitalization ceasing no later than 90 days following
issuance of the certificate of occupancy. These costs are reflected on the balance sheet as
construction-in-progress for each specific property. The Operating Partnership expenses as incurred
all payroll costs of on-site employees working directly at our properties, except as noted above on
our development properties prior to certificate of occupancy issuance and on specific major
renovations at selected properties when additional incremental employees are hired.
Cash and Cash Equivalents
The Operating Partnership considers all demand deposits, money market accounts and investments
in certificates of deposit and repurchase agreements purchased with a maturity of three months or
less at the date of purchase to be cash equivalents. The Operating Partnership maintains its cash
and cash equivalents at financial institutions. The combined account balances at one or more
institutions typically exceed the Federal Depository Insurance Corporation (FDIC) insurance
coverage, and, as a result, there is a concentration of credit risk related to amounts on deposit
in excess of FDIC insurance coverage. The Operating Partnership believes that the risk is not
significant, as the Operating Partnership does not anticipate the financial institutions
non-performance.
Investment Securities
Investment securities are included in other assets in the consolidated balance sheets. These
securities are classified as held-to-maturity and carried at amortized cost if management has the
positive intent and ability to hold the securities to maturity. Otherwise, the securities are
classified as available-for-sale and carried at estimated fair value with unrealized gains and
losses included in accumulated other comprehensive (loss) income, a separate component of partners
capital.
Deferred Financing Costs
Deferred financing costs include fees and costs incurred to obtain the Operating Partnerships
lines of credit and long-term financings. These costs are amortized over the terms of the related
debt. Unamortized financing costs are written off when debt is retired before the maturity date.
The accumulated amortization of such deferred financing costs was $43.9 million and $34.6 million
at December 31, 2010 and 2009, respectively.
Fair Value of Financial Instruments, Including Derivative Instruments
The valuation of financial instruments requires the Operating Partnership to make estimates
and judgments that affect the fair value of the instruments. The Operating Partnership, where
possible, bases the fair values of its financial instruments, including its derivative instruments,
on listed market prices and third party quotes. Where these are not available, the Operating
Partnership bases its estimates on current instruments with similar terms and maturities or on
other factors relevant to the financial instruments.
In the normal course of business, the Operating Partnership is exposed to the effect of
interest rate changes. The Operating Partnership seeks to manage these risks by following
established risk management policies and procedures including the use of derivatives to hedge
interest rate risk on debt instruments.
The Operating Partnership has a policy of only entering into contracts with major financial
institutions based upon their credit ratings and other factors. When viewed in conjunction with the
underlying and offsetting exposure that the derivatives are designed to hedge, the Operating
Partnership has not sustained a material loss from these instruments nor does it anticipate any
material adverse effect on its net income or financial position in the future from the use of
derivatives.
The Operating Partnership recognizes all derivatives as either assets or liabilities in the
consolidated balance sheets and measures those instruments at fair value. In addition, fair value
adjustments will affect either partners capital
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or net income depending on whether the derivative instruments qualify as a hedge for
accounting purposes and, if so, the nature of the hedging activity. When the terms of an underlying
transaction are modified, or when the underlying transaction is terminated or completed, all
changes in the fair value of the instrument are marked-to-market with changes in value included in
net income each period until the instrument matures. Any derivative instrument used for risk
management that does not meet the hedging criteria is marked-to-market each period. The Operating
Partnership does not use derivatives for trading or speculative purposes.
Revenue Recognition
Rental income attributable to residential leases is recorded on a straight-line basis, which
is not materially different than if it were recorded when due from residents and recognized monthly
as it was earned. Leases entered into between a resident and a property for the rental of an
apartment unit are generally year-to-year, renewable upon consent of both parties on an annual or
monthly basis. Fee and asset management revenue and interest income are recorded on an accrual
basis.
Share-Based Compensation
The Company expenses share-based compensation such as restricted shares and share options. Any
EQR common share of beneficial interest, $0.01 par value per share (the Common Shares) issued
pursuant to EQRs incentive equity compensation and employee share purchase plans will result in
the Operating Partnership issuing units of limited partnership interest (OP Units) to EQR on a
one-for-one basis, with the Operating Partnership receiving the net cash proceeds of such
issuances.
The fair value of the option grants are recognized over the vesting period of the options. The
fair value for the Companys share options was estimated at the time the share options were granted
using the Black-Scholes option pricing model with the following weighted average assumptions:
2010 | 2009 | 2008 | ||||||||||
Expected volatility (1) |
32.4 | % | 26.8 | % | 20.3 | % | ||||||
Expected life (2) |
5 years | 5 years | 5 years | |||||||||
Expected dividend yield (3) |
4.85 | % | 4.68 | % | 4.95 | % | ||||||
Risk-free interest rate (4) |
2.29 | % | 1.89 | % | 2.67 | % | ||||||
Option valuation per share |
$ | 6.18 | $ | 3.38 | $ | 4.08 |
(1) | Expected volatility Estimated based on the historical volatility of EQRs share price, on a monthly basis, for a period matching the expected life of each grant. | |
(2) | Expected life Approximates the actual weighted average life of all share options granted since the Company went public in 1993. | |
(3) | Expected dividend yield Calculated by averaging the historical annual yield on EQR shares for a period matching the expected life of each grant, with the annual yield calculated by dividing actual dividends by the average price of EQRs shares in a given year. | |
(4) | Risk-free interest rate The most current U.S. Treasury rate available prior to the grant date for a period matching the expected life of each grant. |
The valuation method and assumptions are the same as those the Company used in accounting for
option expense in its consolidated financial statements. The Black-Scholes option valuation model
was developed for use in estimating the fair value of traded options that have no vesting
restrictions and are fully transferable. This model is only one method of valuing options and the
Companys use of this model should not be interpreted as an endorsement of its accuracy. Because
the Companys share options have characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions can materially affect the fair
value estimate, in managements opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its share options and the actual value of the options may be
significantly different.
Income and Other Taxes
The Operating Partnership generally is not liable for federal income taxes as the partners
recognize their proportionate share of the Operating Partnerships income or loss in their tax
returns; therefore no provision for federal
income taxes has been made at the ERPOP level. Historically, the Operating Partnership has
generally only incurred certain state and local income, excise and franchise taxes. The Operating
Partnership has elected Taxable REIT Subsidiary (TRS) status for certain of its corporate
subsidiaries, primarily those entities engaged in condominium conversion and corporate
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housing activities and as a result, these entities will incur both federal and state income taxes
on any taxable income of such entities after consideration of any net operating losses.
Deferred tax assets and liabilities are recognized for future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. These assets and liabilities are measured using enacted tax rates for
which the temporary differences are expected to be recovered or settled. The effects of changes in
tax rates on deferred tax assets and liabilities are recognized in earnings in the period enacted.
The Operating Partnerships deferred tax assets are generally the result of tax affected
amortization of goodwill, differing depreciable lives on capitalized assets and the timing of
expense recognition for certain accrued liabilities. As of December 31, 2010, the Operating
Partnership has recorded a deferred tax asset of approximately $38.7 million, which is fully offset
by a valuation allowance due to the uncertainty in forecasting future TRS taxable income.
The Operating Partnership provided for income, franchise and excise taxes allocated as follows
in the consolidated statements of operations for the years ended December 31, 2010, 2009 and 2008
(amounts in thousands):
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Income and other tax expense (benefit) (1) |
$ | 334 | $ | 2,804 | $ | 5,279 | ||||||
Discontinued operations, net (2) |
44 | (1,161 | ) | (1,841 | ) | |||||||
Provision for income, franchise and excise taxes (3) |
$ | 378 | $ | 1,643 | $ | 3,438 | ||||||
(1) | Primarily includes state and local income, excise and franchise taxes. | |
(2) | Primarily represents federal income taxes (recovered) on the gains on sales of condominium units owned by a TRS and included in discontinued operations. Also represents state and local income, excise and franchise taxes on operating properties sold and included in discontinued operations. | |
(3) | All provisions for income tax amounts are current and none are deferred. |
The Operating Partnerships TRSs carried back approximately $7.3 million of 2008 net operating
losses (NOL) to 2006. The remaining NOL from the 2008 tax year, as well as the NOLs generated in
2009 and 2010, are available for carryforward to future tax years. The Operating Partnerships TRSs
have approximately $59.3 million of NOL carryforwards available as of January 1, 2011 that will
expire in 2028, 2029 and 2030.
During the years ended December 31, 2010, 2009 and 2008, the Operating Partnerships tax
treatment of dividends and distributions were as follows:
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Tax treatment of dividends and distributions: |
||||||||||||
Ordinary dividends |
$ | 0.607 | $ | 0.807 | $ | 0.699 | ||||||
Long-term capital gain |
0.622 | 0.558 | 0.755 | |||||||||
Unrecaptured section 1250 gain |
0.241 | 0.275 | 0.476 | |||||||||
Dividends and distributions declared per
Unit outstanding |
$ | 1.470 | $ | 1.640 | $ | 1.930 | ||||||
The cost of land and depreciable property, net of accumulated depreciation, for federal income
tax purposes as of December 31, 2010 and 2009 was approximately $11.1 billion and $10.4 billion,
respectively.
Partners Capital
The Limited Partners of ERPOP include various individuals and entities that contributed
their properties to ERPOP in exchange for OP Units. The General Partner of ERPOP is EQR. Net
income is allocated to the Limited Partners based on their respective ownership percentage of the
Operating Partnership. The ownership percentage is calculated by dividing the number of OP Units
held by the Limited Partners by the total OP Units held by the Limited Partners and the General
Partner. Issuance of additional Common Shares and OP Units changes the ownership interests of both
the Limited Partners and EQR. Such transactions and the related proceeds are treated as capital
transactions.
Redeemable Limited Partners
The Operating Partnership classifies Redeemable Limited Partners in the mezzanine section of
the consolidated
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balance sheets for the portion of OP Units that EQR is required, either by contract or securities
law, to deliver registered EQR Common Shares to the exchanging OP Unit holder. The redeemable
limited partner units are adjusted to the greater of carrying value or fair market value based on
the Common Share price of EQR at the end of each respective reporting period.
Noncontrolling Interests
A noncontrolling interest in a subsidiary (minority interest) is in most cases an ownership
interest in the consolidated entity that should be reported as equity in the consolidated financial
statements and separate from the parent companys equity. In addition, consolidated net income is
required to be reported at amounts that include the amounts attributable to both the parent and the
noncontrolling interest and the amount of consolidated net income attributable to the parent and
the noncontrolling interest are required to be disclosed on the face of the Consolidated Statements
of Operations. See Note 3 for further discussion.
Partially Owned Properties: The Operating Partnership reflects noncontrolling interests in
partially owned properties on the balance sheet for the portion of properties consolidated by the
Operating Partnership that are not wholly owned by the Operating Partnership. The earnings or
losses from those properties attributable to the noncontrolling interests are reflected as
noncontrolling interests in partially owned properties in the consolidated statements of
operations.
Use of Estimates
In preparation of the Operating Partnerships financial statements in conformity with
accounting principles generally accepted in the United States, management makes estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements as well as the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from these
estimates.
Reclassifications
Certain reclassifications considered necessary for a fair presentation have been made to the
prior period financial statements in order to conform to the current year presentation. These
reclassifications have not changed the results of operations or capital.
Other
In June 2009, the Financial Accounting Standards Board (FASB) issued The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, which
superseded all then-existing non-SEC accounting and reporting standards and became the source of
authoritative U.S. generally accepted accounting principles recognized by the FASB to be applied by
non-governmental entities. The Operating Partnership adopted the codification as required,
effective for the quarter ended September 30, 2009. The adoption of the codification has no impact
on the Operating Partnerships consolidated results of operations or financial position but changed
the way we refer to accounting literature in our reports.
Effective January 1, 2010, in an effort to improve financial standards for transfers of
financial assets, more stringent conditions for reporting a transfer of a portion of a financial
asset as a sale (e.g. loan participations) are required, the concept of a qualifying
special-purpose entity and special guidance for guaranteed mortgage securitizations are
eliminated, other sale-accounting criteria is clarified and the initial measurement of a
transferors interest in transferred financial assets is changed. This does not have a material
effect on the Operating Partnerships consolidated results of operations or financial position.
Effective January 1, 2010, the analysis for identifying the primary beneficiary of a Variable
Interest Entity (VIE) has been simplified by replacing the previous quantitative-based analysis
with a framework that is based more on qualitative judgments. The analysis requires the primary
beneficiary of a VIE to be identified as the party that both (a) has the power to direct the
activities of a VIE that most significantly impact its economic performance and (b) has an
obligation to absorb losses or a right to receive benefits that could potentially be significant to
the VIE. For the Operating Partnership, this includes its consolidated development partnerships as
the Operating Partnership provides substantially all of the capital for these ventures (other than
third party mortgage debt, if any). For the Operating Partnership, these requirements affected
only disclosures and had no impact on the Operating Partnerships consolidated results of
operations or financial position. See Note 6 for further discussion.
The Operating Partnership is required to make certain disclosures regarding noncontrolling
interests in consolidated limited-life subsidiaries. The Operating Partnership is the controlling
partner in various consolidated partnerships owning 24 properties and 5,232 apartment units and
various completed and uncompleted development
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properties having a noncontrolling interest book value of $8.0 million at December 31, 2010.
Some of these partnership agreements contain provisions that require the partnerships to be
liquidated through the sale of their assets upon reaching a date specified in each respective
partnership agreement. The Operating Partnership, as controlling partner, has an obligation to
cause the property owning partnerships to distribute the proceeds of liquidation to the
Noncontrolling Interests in these Partially Owned Properties only to the extent that the net
proceeds received by the partnerships from the sale of their assets warrant a distribution based on
the partnership agreements. As of December 31, 2010, the Operating Partnership estimates the value
of Noncontrolling Interest distributions would have been approximately $53.0 million (Settlement
Value) had the partnerships been liquidated. This Settlement Value is based on estimated third
party consideration realized by the partnerships upon disposition of the Partially Owned Properties
and is net of all other assets and liabilities, including yield maintenance on the mortgages
encumbering the properties, that would have been due on December 31, 2010 had those mortgages been
prepaid. Due to, among other things, the inherent uncertainty in the sale of real estate assets,
the amount of any potential distribution to the Noncontrolling Interests in the Operating
Partnerships Partially Owned Properties is subject to change. To the extent that the
partnerships underlying assets are worth less than the underlying liabilities, the Operating
Partnership has no obligation to remit any consideration to the Noncontrolling Interests in these
Partially Owned Properties.
Effective beginning the quarter ended June 30, 2009, disclosures about fair value of financial
instruments are required for interim reporting periods in summarized financial information for
publicly traded companies as well as in annual financial statements. This does not have a material
effect on the Operating Partnerships consolidated results of operations or financial position. See
Note 11 for further discussion.
Effective January 1, 2010, companies are required to separately disclose the amounts of
significant transfers of assets and liabilities into and out of Level 1, Level 2 and Level 3 of the
fair value hierarchy and the reasons for those transfers. Companies must also develop and disclose
their policy for determining when transfers between levels are recognized. In addition, companies
are required to provide fair value disclosures for each class rather than each major category of
assets and liabilities. For fair value measurements using significant other observable inputs
(Level 2) or significant unobservable inputs (Level 3), companies are required to disclose the
valuation technique and the inputs used in determining fair value for each class of assets and
liabilities. This does not have a material effect on the Operating Partnerships consolidated
results of operations or financial position. See Note 11 for further discussion.
Effective January 1, 2011, companies will be required to separately disclose purchases, sales,
issuances and settlements on a gross basis in the reconciliation of recurring Level 3 fair value
measurements. The Operating Partnership does not expect this will have a material effect on its
consolidated results of operations or financial position.
Effective January 1, 2009, in an effort to improve financial standards for derivative
instruments and hedging activities, companies are required to enhance disclosures to enable
investors to better understand their effects on an entitys financial position, financial
performance and cash flows. Among other requirements, entities are required to provide enhanced
disclosures about: (1) how and why an entity uses derivative instruments; (2) how derivative
instruments and related hedged items are accounted for; and (3) how derivative instruments and
related hedged items affect an entitys financial position, financial performance and cash flows.
Other than the enhanced disclosure requirements, this does not have a material effect on the
Operating Partnerships consolidated financial statements. See Note 11 for further discussion.
Effective January 1, 2009, issuers of certain convertible debt instruments that may be settled
in cash on conversion were required to separately account for the liability and equity components
of the instrument in a manner that reflects each issuers nonconvertible debt borrowing rate. As
the Operating Partnership is required to apply this retrospectively, the accounting for the
Operating Partnerships $650.0 million ($482.5 million outstanding at December 31, 2010) 3.85%
convertible unsecured notes that were issued in August 2006 and mature in August 2026 was affected.
The Operating Partnership recognized $18.6 million, $20.6 million and $24.4 million in interest
expense related to the stated coupon rate of 3.85% for the years ended December 31, 2010, 2009 and
2008, respectively. The amount of the conversion option as of the date of issuance calculated by
the Operating Partnership using a 5.80% effective interest rate was $44.3 million and is being
amortized to interest expense over the expected life of the convertible notes (through the first
put date on August 18, 2011). Total amortization of the cash discount and conversion option
discount on the unsecured notes resulted in a reduction to earnings of approximately $7.8 million
and $10.6 million, respectively, or $0.03 per Unit and $0.04 per Unit, respectively, for the years
ended December 31, 2010 and 2009, and is anticipated to result in a reduction to earnings of
approximately $5.0 million or $0.02 per Unit for the year ended December 31, 2011. In addition, the
Operating Partnership decreased the January 1, 2009 balance of retained earnings (included in
general partners capital) by $27.0 million, decreased the January 1, 2009 balance of notes by
$17.3 million and increased the January 1, 2009 balance of paid in capital (included in general
partners capital) by $44.3 million. Due to the required retrospective application, it resulted in
a reduction to earnings of approximately $13.3 million or $0.05 per Unit for the year ended
December 31, 2008. The carrying amount of the conversion option remaining in paid in capital
(included in
F-18
Table of Contents
general partners capital) was $44.3 million at both December 31, 2010 and 2009. The unamortized
cash and conversion option discounts totaled $5.0 million and $12.8 million at December 31, 2010
and 2009, respectively.
3. Capital and Redeemable Limited Partners
The following tables present the changes in the Operating Partnerships issued and outstanding
Units (which includes OP Units and Long-Term Incentive Plan (LTIP) Units) and in the limited
partners Units for the years ended December 31, 2010, 2009 and 2008:
2010 | 2009 | 2008 | ||||||||||
General and Limited Partner Units |
||||||||||||
General and Limited Partner Units outstanding at January 1, |
294,157,017 | 289,466,537 | 287,974,981 | |||||||||
Issued to General Partner: |
||||||||||||
Conversion of Series E Preference Units |
328,363 | 612 | 36,830 | |||||||||
Conversion of Series H Preference Units |
32,516 | | 2,750 | |||||||||
Issuance of OP Units |
6,151,198 | 3,497,300 | | |||||||||
Exercise of EQR share options |
2,506,645 | 422,713 | 995,129 | |||||||||
Employee Share Purchase Plan (ESPP) |
157,363 | 324,394 | 195,961 | |||||||||
Restricted EQR share grants, net |
235,767 | 298,717 | 461,954 | |||||||||
Issued to Limited Partners: |
||||||||||||
LTIP Units, net |
92,892 | 154,616 | | |||||||||
OP Units issued through acquisitions/consolidations |
205,648 | 32,061 | 19,017 | |||||||||
Conversion of Series B Junior Preference Units |
| 7,517 | | |||||||||
OP Units Other: |
||||||||||||
Repurchased and retired |
(58,130 | ) | (47,450 | ) | (220,085 | ) | ||||||
General and Limited Partner Units outstanding at December 31, |
303,809,279 | 294,157,017 | 289,466,537 | |||||||||
Limited Partner Units |
||||||||||||
Limited Partner Units outstanding at January 1, |
14,197,969 | 16,679,777 | 18,420,320 | |||||||||
Limited Partner LTIP Units, net |
92,892 | 154,616 | | |||||||||
Limited Partner OP Units issued through acquisitions/consolidations |
205,648 | 32,061 | 19,017 | |||||||||
Conversion of Series B Junior Preference Units |
| 7,517 | | |||||||||
Conversion of Limited Partner OP Units to EQR Common Shares |
(884,472 | ) | (2,676,002 | ) | (1,759,560 | ) | ||||||
Limited Partner Units outstanding at December 31, |
13,612,037 | 14,197,969 | 16,679,777 | |||||||||
Limited Partner Units Ownership Interest in Operating Partnership |
4.5 | % | 4.8 | % | 5.8 | % | ||||||
Limited Partner LTIP Units Issued: |
||||||||||||
Issuance per unit |
| $ | 0.50 | | ||||||||
Issuance contribution valuation |
| $ | 0.1 million | | ||||||||
Limited Partner OP Units Issued: |
||||||||||||
Acquisitions/consolidations per unit |
$ | 40.09 | $ | 26.50 | $ | 44.64 | ||||||
Acquisitions/consolidations valuation |
$ | 8.2 million | $ | 0.8 million | $ | 0.8 million | ||||||
Conversion of Series B Junior Preference Units per unit |
| $ | 24.50 | | ||||||||
Conversion of Series B Junior Preference Units valuation |
| $ | 0.2 million | |
An unlimited amount of equity and debt securities remains available for issuance by EQR and
the Operating Partnership under effective shelf registration statements filed with the SEC. Most
recently, EQR and the Operating Partnership filed a universal shelf registration statement for an
unlimited amount of equity and debt securities that became automatically effective upon filing with
the SEC in October 2010 (under SEC regulations enacted in 2005, the registration statement
automatically expires on October 14, 2013 and does not contain a maximum issuance amount). Per the
terms of ERPOPs partnership agreement, EQR contributes the net proceeds of all equity offerings to
the capital of the Operating Partnership in exchange for additional OP Units (on a one-for-one
common share per OP Unit basis) or preference units (on a one-for-one preferred share per
preference unit basis).
In September 2009, EQR announced the establishment of an At-The-Market (ATM) share offering
program
which would allow EQR to sell up to 17.0 million Common Shares from time to time over the next
three years into the
F-19
Table of Contents
existing trading market at current market prices as well as through negotiated transactions.
Per the terms of ERPOPs partnership agreement, EQR contributes the net proceeds from all equity
offerings to the capital of the Operating Partnership in exchange for additional OP Units (on a
one-for-one Common Share per OP Unit basis). During the year ended December 31, 2010, EQR issued
approximately 6.2 million Common Shares at an average price of $47.45 per share for total
consideration of approximately $291.9 million through the ATM program. Concurrent with these
transactions, the Operating Partnership issued approximately 6.2 million OP Units to EQR. During
the year ended December 31, 2009, EQR issued approximately 3.5 million Common Shares at an average
price of $35.38 per share for total consideration of approximately $123.7 million through the ATM
program. Concurrent with these transactions, the Operating Partnership issued approximately 3.5
million OP Units to EQR. As of December 31, 2009, transactions to issue approximately 1.1 million
of the 3.5 million Common Shares had not yet settled. As of December 31, 2009, the Company
increased the number of Common Shares issued and outstanding by this amount and recorded a
receivable of approximately $37.6 million included in other assets on the consolidated balance
sheets. See Note 20 for further discussion on shares available under this program.
EQR has a share repurchase program authorized by the Board of Trustees. Considering
the repurchase activity for the year ended December 31, 2010, EQR has remaining authorization to
repurchase an additional $464.6 million of its shares as of December 31, 2010.
During the year ended December 31, 2010, EQR repurchased 58,130 of its Common Shares at an
average price of $32.46 per share for total consideration of $1.9 million. These shares were
retired subsequent to the repurchases. Concurrent with these transactions, the Operating
Partnership repurchased and retired 58,130 OP Units previously issued to EQR. All of the shares
repurchased during the year ended December 31, 2010 were repurchased from employees at the then
current market prices to cover the minimum statutory tax withholding obligations related to the
vesting of employees restricted shares.
During the year ended December 31, 2009, EQR repurchased 47,450 of its Common Shares at an
average price of $23.69 per share for total consideration of $1.1 million. These shares were
retired subsequent to the repurchases. Concurrent with these transactions, the Operating
Partnership repurchased and retired 47,450 OP Units previously issued to EQR. All of the shares
repurchased during the year ended December 31, 2009 were repurchased from employees at the then
current market prices to cover the minimum statutory tax withholding obligations related to the
vesting of employees restricted shares.
During the year ended December 31, 2008, EQR repurchased 220,085 of its Common Shares at an
average price of $35.93 per share for total consideration of $7.9 million. These shares were
retired subsequent to the repurchases. Concurrent with these transactions, the Operating
Partnership repurchased and retired 220,085 OP Units previously issued to EQR. Of the total shares
repurchased, 120,085 shares were repurchased from employees at an average price of $36.10 per share
(the average of the then current market prices) to cover the minimum statutory tax withholding
obligations related to the vesting of employees restricted shares. The remaining 100,000 shares
were repurchased in the open market at an average price of $35.74 per share.
The Limited Partners of the Operating Partnership as of December 31, 2010 include various
individuals and entities that contributed their properties to the Operating Partnership in exchange
for OP Units, as well as the equity positions of the holders of LTIP Units. Subject to certain
exceptions (including the book-up requirements of LTIP Units), Limited Partners may exchange
their Units with EQR for EQR Common Shares on a one-for-one basis. The carrying value of the
Limited Partner Units (including redeemable interests) is allocated based on the number of Limited
Partner Units in total in proportion to the number of Limited Partner Units in total plus the
number of General Partner Units. Net income is allocated to the Limited Partner Units based on the
weighted average ownership percentage during the period.
The Operating Partnership has the right but not the obligation to make a cash payment instead
of issuing EQR Common Shares to any and all holders of Limited Partner Units requesting an exchange
of their OP Units with EQR. Once the Operating Partnership elects not to redeem the Limited
Partner Units for cash, EQR is obligated to deliver EQR Common Shares to the exchanging limited
partner.
The Limited Partner Units are classified as either mezzanine equity or permanent equity. If
EQR is required, either by contract or securities law, to deliver registered EQR Common Shares,
Limited Partner Units are differentiated and referred to as Redeemable Limited Partner Units. Instruments that
require settlement in registered shares can not be classified in permanent equity as it is not
always completely within an issuers control to deliver registered shares. Therefore, settlement
in cash is assumed and that responsibility for settlement in cash is deemed to fall to the
Operating Partnership as the primary source of cash for EQR, resulting in presentation in the
mezzanine section of the balance sheet. The Redeemable Limited Partner Units
are adjusted to the greater of carrying value or fair market value based on the Common Share
price of EQR at the end of each
F-20
Table of Contents
respective reporting period. EQR has the ability to deliver unregistered EQR Common Shares
for the remaining portion of the Limited Partner Units that are classified in permanent equity at
December 31, 2010 and 2009.
The carrying value of the Redeemable Limited Partner Units is allocated based on the number of
Redeemable Limited Partner Units in proportion to the number of Limited Partner Units in total.
Such percentage of the total carrying value of Limited Partner Units which is ascribed to the
Redeemable Limited Partner Units is then adjusted to the greater of carrying value or fair market
value as described above. As of December 31, 2010, the Redeemable Limited Partner Units have a
redemption value of approximately $383.5 million, which represents the value of EQR Common Shares
that would be issued in exchange with the Redeemable Limited Partner Units.
The following table presents the changes in the redemption value of the Redeemable Limited
Partners for the years for the years ended December 31, 2010, 2009 and 2008, respectively (amounts
in thousands):
2010 | 2009 | 2008 | ||||||||||
Balance at January 1, |
$ | 258,280 | $ | 264,394 | $ | 345,165 | ||||||
Change in market value |
129,918 | 14,544 | (65,524 | ) | ||||||||
Change in carrying value |
(4,658 | ) | (20,658 | ) | (15,247 | ) | ||||||
Balance at December 31, |
$ | 383,540 | $ | 258,280 | $ | 264,394 | ||||||
EQR contributes all net proceeds from its various equity offerings (including proceeds from
exercise of options for EQR Common Shares) to the Operating Partnership. In return for those
contributions, EQR receives a number of OP Units in ERPOP equal to the number of Common Shares it
has issued in the equity offering (or in the case of a preferred equity offering, a number of
preference units in ERPOP equal in number and having the same terms as the preferred shares issued
in the equity offering).
The following table presents the Operating Partnerships issued and outstanding Preference
Units as of December 31, 2010 and 2009:
Annual | Amounts in thousands | |||||||||||||||||||
Redemption | Conversion | Dividend per | December 31, | December 31, | ||||||||||||||||
Date (1) (2) | Rate (2) | Unit (3) | 2010 | 2009 | ||||||||||||||||
Preference Units: |
||||||||||||||||||||
7.00% Series E Cumulative Convertible Preference Units;
liquidation value $25 per unit; 0 and 328,466 units
issued and outstanding at December 31, 2010 and
December 31, 2009, respectively |
11/1/98 | 1.1128 | $ | 1.75 | $ | | $ | 8,212 | ||||||||||||
7.00% Series H Cumulative Convertible Preference Units;
liquidation value $25 per unit 0 and 22,459 units issued and outstanding at December 31, 2010 and December 31, 2009, respectively |
6/30/98 | 1.4480 | $ | 1.75 | | 561 | ||||||||||||||
8.29% Series K Cumulative Redeemable Preference Units;
liquidation value $50 per unit; 1,000,000 units issued and outstanding at December 31, 2010 and December 31, 2009 |
12/10/26 | N/A | $ | 4.145 | 50,000 | 50,000 | ||||||||||||||
6.48% Series N Cumulative Redeemable Preference Units;
liquidation value $250 per unit; 600,000 units issued and outstanding at December 31, 2010 and December 31, 2009 (4) |
6/19/08 | N/A | $ | 16.20 | 150,000 | 150,000 | ||||||||||||||
$ | 200,000 | $ | 208,773 | |||||||||||||||||
(1) | On or after the redemption date, redeemable preference units (Series K and N) may be redeemed for cash at the option of the Operating Partnership, in whole or in part, at a redemption price equal to the liquidation price per unit, plus accrued and unpaid distributions, if any, in conjunction with the concurrent redemption of the corresponding EQR Preferred Shares. | |
(2) | On or after the redemption date, convertible preference units (Series E and H) may be redeemed under certain circumstances at the option of the Operating Partnership for cash (in the case of Series E) or OP Units (in the case of Series H), in whole or in part, at various redemption prices per unit based upon the contractual conversion rate, plus accrued and unpaid distributions, if any, in conjunction with the concurrent redemption/conversion of the corresponding EQR Preferred Shares. On November 1, |
F-21
Table of Contents
2010, the Operating Partnership redeemed its Series E and Series H Cumulative Convertible Preference Units for cash consideration of $0.8 million and 355,539 OP Units. | ||
(3) | Dividends on all series of Preference Units are payable quarterly at various pay dates. The dividend listed for Series N is a Preference Unit rate and the equivalent depositary unit annual dividend is $1.62 per unit. | |
(4) | The Series N Preference Units have a corresponding depositary unit that consists of ten times the number of units and one-tenth the liquidation value and dividend per unit. |
On July 30, 2009, the Operating Partnership elected to convert all 7,367 Series B Junior
Convertible Preference Units into 7,517 OP Units. The actual preference unit dividends declared for
the period outstanding in 2009 was $1.17 per unit.
On March 31, 2010, the Operating Partnership issued 188,571 OP Units at a price of $39.15 per
OP Unit for total valuation of $7.4 million as partial consideration for the acquisition of one
rental property. As the value of the OP Units issued was agreed by contract to be $35.00 per OP
Unit, the difference between the contracted value and fair value (the closing price of EQR Common
Shares on the closing date) was recorded as an increase to the purchase price.
During the year ended December 31, 2010, the Operating Partnership acquired all of its
partners interest in two consolidated partially owned properties consisting of 432 apartment
units, one consolidated partially owned development project and one consolidated partially owned
land parcel for $0.7 million. One of these partially owned property buyouts was funded through the
issuance of 1,129 OP Units valued at $50,000. The Operating Partnership also increased its
ownership in three consolidated partially owned properties through the buyout of certain equity
interests which were funded through the issuance of 15,948 OP Units valued at $0.8 million and cash
payments of $15.3 million. In conjunction with these transactions, the Operating Partnership
reduced paid in capital (included in general partners capital) by $16.9 million and other
liabilities by $0.2 million and increased Noncontrolling Interests Partially Owned Properties by
$0.2 million.
During the year ended December 31, 2009, the Operating Partnership acquired all of its
partners interests in five consolidated partially owned properties consisting of 1,587 apartment
units for $9.2 million. In addition, the Operating Partnership also acquired a portion of the
outside partner interests in two consolidated partially owned properties, one funded using cash of
$2.1 million and the other funded through the issuance of 32,061 OP Units valued at $0.8 million.
In conjunction with these transactions, the Operating Partnership reduced paid in capital (included
in general partners capital) by $1.5 million and Noncontrolling Interests Partially Owned
Properties by $11.7 million.
During the year ended December 31, 2008, the Operating Partnership acquired all of its
partners interests in one consolidated partially owned property consisting of 144 apartment units
for $5.9 million and three consolidated partially owned land parcels for $1.6 million. In addition,
the Operating Partnership made an additional payment of $1.3 million related to an April 2006
acquisition of a partners interest in a now wholly owned property, partially funded through the
issuance of 19,017 OP Units valued at $0.8 million.
4. Real Estate
The following table summarizes the carrying amounts for the Operating Partnerships investment
in real estate (at cost) as of December 31, 2010 and 2009 (amounts in thousands):
2010 | 2009 | |||||||
Land |
$ | 4,110,275 | $ | 3,650,324 | ||||
Depreciable property: |
||||||||
Buildings and improvements |
13,995,121 | 12,781,543 | ||||||
Furniture, fixtures and equipment |
1,231,391 | 1,111,978 | ||||||
Projects under development: |
||||||||
Land |
28,260 | 106,716 | ||||||
Construction-in-progress |
102,077 | 562,263 | ||||||
Land held for development: |
||||||||
Land |
198,465 | 181,430 | ||||||
Construction-in-progress |
36,782 | 70,890 | ||||||
Investment in real estate |
19,702,371 | 18,465,144 | ||||||
Accumulated depreciation |
(4,337,357 | ) | (3,877,564 | ) | ||||
Investment in real estate, net |
$ | 15,365,014 | $ | 14,587,580 | ||||
During the year ended December 31, 2010, the Operating Partnership acquired the entire equity
interest in the following from unaffiliated parties (purchase price in thousands):
F-22
Table of Contents
Purchase | ||||||||||||
Properties | Apartment Units | Price | ||||||||||
Rental Properties |
16 | 4,445 | $ | 1,485,701 | ||||||||
Land Parcels (six) |
| | 68,869 | |||||||||
Total |
16 | 4,445 | $ | 1,554,570 | ||||||||
In addition to the properties discussed above, the Operating Partnership acquired the 75%
equity interest it did not own in seven previously unconsolidated properties containing 1,811
apartment units with a real estate value of $105.1 million.
During the year ended December 31, 2009, the Operating Partnership acquired the entire equity
interest in the following from unaffiliated parties (purchase price in thousands):
Purchase | ||||||||||||
Properties | Apartment Units | Price | ||||||||||
Rental Properties |
2 | 566 | $ | 145,036 | ||||||||
Land Parcel (one) |
| | 11,500 | |||||||||
Total |
2 | 566 | $ | 156,536 | ||||||||
The Operating Partnership also acquired the 75% equity interest in one previously
unconsolidated property it did not already own consisting of 250 apartment units for a gross sales
price of $18.5 million from its institutional joint venture partner.
During the year ended December 31, 2010, the Operating Partnership disposed of the following
to unaffiliated parties (sales price in thousands):
Properties | Apartment Units | Sales Price | ||||||||||
Rental Properties: |
||||||||||||
Consolidated |
35 | 7,171 | $ | 718,352 | ||||||||
Unconsolidated (1) |
27 | 6,275 | 417,779 | |||||||||
Land Parcel (one) |
| | 4,000 | |||||||||
Condominium Conversion Properties |
1 | 2 | 360 | |||||||||
Total |
63 | 13,448 | $ | 1,140,491 | ||||||||
(1) | The Operating Partnership owned a 25% interest in these unconsolidated rental properties. Sales price listed is the gross sales price. |
The Operating Partnership recognized a net gain on sales of discontinued operations of
approximately $298.0 million, a net gain on sales of unconsolidated entities of approximately $28.1
million and a net loss on sales of land parcels of approximately $1.4 million on the above sales.
During the year ended December 31, 2009, the Operating Partnership disposed of the following
to unaffiliated parties (sales price in thousands):
Properties | Apartment Units | Sales Price | ||||||||||
Rental Properties: |
||||||||||||
Consolidated |
54 | 11,055 | $ | 905,219 | ||||||||
Unconsolidated (1) |
6 | 1,434 | 96,018 | |||||||||
Condominium Conversion Properties |
1 | 62 | 12,021 | |||||||||
Total |
61 | 12,551 | $ | 1,013,258 | ||||||||
(1) | The Operating Partnership owned a 25% interest in these unconsolidated rental properties. Sales price listed is the gross sales price. The Operating Partnerships buyout of its partners interest in one previously unconsolidated property is not included in the above totals. |
F-23
Table of Contents
The Operating Partnership recognized a net gain on sales of discontinued operations of
approximately $335.3 million and a net gain on sales of unconsolidated entities of approximately
$10.7 million on the above sales.
5. Commitments to Acquire/Dispose of Real Estate
In addition to the properties that were subsequently acquired as discussed in Note 20, the
Operating Partnership had entered into separate agreements to acquire the following (purchase price
in thousands):
Properties | Apartment Units | Purchase Price | ||||||||||
Rental Properties |
2 | 683 | $ | 125,250 | ||||||||
Total |
2 | 683 | $ | 125,250 | ||||||||
In addition to the properties that were subsequently disposed of as discussed in Note 20, the
Operating Partnership had entered into separate agreements to dispose of the following (sales price
in thousands):
Properties | Apartment Units | Sales Price | ||||||||||
Rental Properties |
15 | 4,152 | $ | 378,650 | ||||||||
Total |
15 | 4,152 | $ | 378,650 | ||||||||
The closings of these pending transactions are subject to certain conditions and restrictions,
therefore, there can be no assurance that these transactions will be consummated or that the final
terms will not differ in material respects from those summarized in the preceding paragraphs.
6. Investments in Partially Owned Entities
The Operating Partnership has co-invested in various properties with unrelated third parties
which are either consolidated or accounted for under the equity method of accounting
(unconsolidated). The following tables and information summarize the Operating Partnerships
investments in partially owned entities as of December 31, 2010 (amounts in thousands except for
project and apartment unit amounts):
F-24
Table of Contents
Consolidated | ||||||||||||||||||||
Development Projects (VIEs) | ||||||||||||||||||||
Held for | Completed, | Completed | ||||||||||||||||||
and/or Under | Not | and | ||||||||||||||||||
Development | Stabilized (4) | Stabilized | Other | Total | ||||||||||||||||
Total projects (1) |
| 1 | 4 | 19 | 24 | |||||||||||||||
Total apartment units (1) |
| 490 | 1,302 | 3,440 | 5,232 | |||||||||||||||
Balance sheet information
at 12/31/10 (at 100%): |
||||||||||||||||||||
ASSETS |
||||||||||||||||||||
Investment in real estate |
$ | 44,006 | $ | 257,747 | $ | 390,465 | $ | 438,329 | $ | 1,130,547 | ||||||||||
Accumulated depreciation |
| | (18,471 | ) | (124,347 | ) | (142,818 | ) | ||||||||||||
Investment in real estate, net |
44,006 | 257,747 | 371,994 | 313,982 | 987,729 | |||||||||||||||
Cash and cash equivalents |
877 | 1,288 | 7,384 | 11,581 | 21,130 | |||||||||||||||
Deposits restricted |
1,115 | 922 | 3,205 | 8 | 5,250 | |||||||||||||||
Escrow deposits mortgage |
| | 222 | 2,321 | 2,543 | |||||||||||||||
Deferred financing costs, net |
| 2,800 | 412 | 505 | 3,717 | |||||||||||||||
Other assets |
339 | 268 | 308 | 143 | 1,058 | |||||||||||||||
Total assets |
$ | 46,337 | $ | 263,025 | $ | 383,525 | $ | 328,540 | $ | 1,021,427 | ||||||||||
LIABILITIES AND CAPITAL |
||||||||||||||||||||
Mortgage notes payable |
$ | 18,342 | $ | 141,741 | $ | 275,348 | $ | 314,535 | $ | 749,966 | ||||||||||
Accounts payable & accrued expenses |
346 | 2,215 | 1,070 | 1,259 | 4,890 | |||||||||||||||
Accrued interest payable |
1,294 | 521 | 605 | 1,531 | 3,951 | |||||||||||||||
Other liabilities |
1,617 | 1,568 | 910 | 1,001 | 5,096 | |||||||||||||||
Security deposits |
| 1,021 | 955 | 1,392 | 3,368 | |||||||||||||||
Total liabilities |
21,599 | 147,066 | 278,888 | 319,718 | 767,271 | |||||||||||||||
Noncontrolling Interests Partially Owned Properties |
3,418 | 5,025 | 4,278 | (4,730 | ) | 7,991 | ||||||||||||||
Accumulated other comprehensive (loss) |
| (1,322 | ) | | | (1,322 | ) | |||||||||||||
General and Limited Partners Capital |
21,320 | 112,256 | 100,359 | 13,552 | 247,487 | |||||||||||||||
Total capital |
24,738 | 115,959 | 104,637 | 8,822 | 254,156 | |||||||||||||||
Total liabilities and capital |
$ | 46,337 | $ | 263,025 | $ | 383,525 | $ | 328,540 | $ | 1,021,427 | ||||||||||
Debt Secured (2): |
||||||||||||||||||||
EQR Ownership (3) |
$ | 18,342 | $ | 141,741 | $ | 275,348 | $ | 252,857 | $ | 688,288 | ||||||||||
Noncontrolling Ownership |
| | | 61,678 | 61,678 | |||||||||||||||
Total (at 100%) |
$ | 18,342 | $ | 141,741 | $ | 275,348 | $ | 314,535 | $ | 749,966 | ||||||||||
F-25
Table of Contents
Consolidated | ||||||||||||||||||||
Development Projects (VIEs) | ||||||||||||||||||||
Held for | ||||||||||||||||||||
and/or Under | Completed, | Completed | ||||||||||||||||||
Development | Not Stabilized (4) | and Stabilized | Other | Total | ||||||||||||||||
Operating information for the year
ended 12/31/10 (at 100%): |
||||||||||||||||||||
Operating revenue |
$ | 4 | $ | 6,344 | $ | 25,607 | $ | 55,928 | $ | 87,883 | ||||||||||
Operating expenses |
758 | 3,458 | 9,370 | 19,906 | 33,492 | |||||||||||||||
Net operating (loss) income |
(754 | ) | 2,886 | 16,237 | 36,022 | 54,391 | ||||||||||||||
Depreciation |
| | 12,239 | 14,882 | 27,121 | |||||||||||||||
General and administrative/other |
51 | | 127 | 92 | 270 | |||||||||||||||
Impairment |
8,959 | | | | 8,959 | |||||||||||||||
Operating (loss) income |
(9,764 | ) | 2,886 | 3,871 | 21,048 | 18,041 | ||||||||||||||
Interest and other income |
23 | | 10 | 30 | 63 | |||||||||||||||
Other expenses |
(493 | ) | | | (548 | ) | (1,041 | ) | ||||||||||||
Interest: |
||||||||||||||||||||
Expense incurred, net |
(925 | ) | (2,872 | ) | (6,596 | ) | (20,576 | ) | (30,969 | ) | ||||||||||
Amortization of deferred financing costs |
| | (753 | ) | (238 | ) | (991 | ) | ||||||||||||
(Loss) income before income and other taxes
and discontinued operations |
(11,159 | ) | 14 | (3,468 | ) | (284 | ) | (14,897 | ) | |||||||||||
Income and other tax (expense) benefit |
(31 | ) | | | (5 | ) | (36 | ) | ||||||||||||
Net loss on sales of land parcels |
(234 | ) | | | | (234 | ) | |||||||||||||
Net gain on sales of discontinued operations |
711 | | | 34,842 | 35,553 | |||||||||||||||
Net (loss) income |
$ | (10,713 | ) | $ | 14 | $ | (3,468 | ) | $ | 34,553 | $ | 20,386 | ||||||||
(1) | Project and apartment unit counts exclude all uncompleted development projects until those projects are substantially completed. | ||
(2) | All debt is non-recourse to the Operating Partnership with the exception of $14.0 million in mortgage debt on one development project. | ||
(3) | Represents the Operating Partnerships current economic ownership interest. | ||
(4) | Projects included here are substantially complete. However, they may still require additional exterior and interior work for all apartment units to be available for leasing. |
During the year ended December 31, 2010, the Operating Partnership acquired the 75%
equity interest it did not own in seven previously unconsolidated properties containing 1,811
apartment units in exchange for an approximate $30.0 million payment to its partner. In addition,
the Operating Partnership repaid the net $70.0 million mortgage loan, which was to mature on May 1,
2010, concurrent with closing using proceeds drawn from the Operating Partnerships line of credit.
The Operating Partnership also sold its 25% equity interest in the remaining 24 unconsolidated
properties containing 5,635 apartment units in exchange for an approximate $25.4 million payment from its partner and the related $264.8 million
in non-recourse mortgage debt was extinguished by the partner at closing.
On December 29, 2010, the Operating Partnership admitted an 80% institutional partner to an
entity owning a developable land parcel in Florida in exchange for $11.7 million in cash and
retained a 20% equity interest. This land parcel is now unconsolidated. Total project cost is
approximately $76.1 million and construction is expected to start in the first quarter of 2011.
The Operating Partnership is responsible for constructing the project and has given certain
construction cost overun guarantees.
The Operating Partnership is the controlling partner in various consolidated partnership
properties and development properties having a noncontrolling interest book value of $8.0 million
at December 31, 2010. The Operating Partnership has identified its development partnerships as
VIEs as the Operating Partnership provides substantially all of the capital for these ventures
(other than third party mortgage debt, if any) despite the fact that each partner legally owns 50%
of each venture. The Operating Partnership is the primary beneficiary as it exerts the most
significant power over the ventures, absorbs the majority of the expected losses and has the right
to receive a majority of the expected residual returns. The assets net of liabilities of the
Operating Partnerships VIEs are restricted in their use to the specific VIE to which they relate
and are not available for general corporate use. The Operating Partnership does not have any
unconsolidated VIEs.
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7. Deposits Restricted
The following table presents the Operating Partnerships restricted deposits as of December
31, 2010 and 2009 (amounts in thousands):
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Taxdeferred (1031) exchange proceeds |
$ | 103,887 | $ | 244,257 | ||||
Earnest money on pending acquisitions |
9,264 | 6,000 | ||||||
Restricted deposits on debt (1) |
18,966 | 49,565 | ||||||
Resident security and utility deposits |
40,745 | 39,361 | ||||||
Other |
8,125 | 12,825 | ||||||
Totals |
$ | 180,987 | $ | 352,008 | ||||
(1) | Primarily represents amounts held in escrow by the lender and released as draw requests are made on fully funded development mortgage loans. |
8. Mortgage Notes Payable
As of December 31, 2010, the Operating Partnership had outstanding mortgage debt of
approximately $4.8 billion.
During the year ended December 31, 2010, the Operating Partnership:
| Repaid $652.1 million of mortgage loans; | ||
| Obtained $173.6 million of new mortgage loan proceeds; | ||
| Assumed $359.1 million of mortgage debt on seven acquired properties; | ||
| Was released from $40.0 million of mortgage debt assumed by the purchaser on two disposed properties; and | ||
| Assumed $112.6 million of mortgage debt on seven previously unconsolidated properties and repaid the net $70.0 million mortgage loan (net of $42.6 million of cash collateral held by the lender) concurrent with closing using proceeds drawn from the Operating Partnerships line of credit. |
The Operating Partnership recorded approximately $2.5 million and $1.0 million of prepayment
penalties and write-offs of unamortized deferred financing costs, respectively, during the year
ended December 31, 2010 as additional interest expense related to debt extinguishment of mortgages.
As of December 31, 2010, the Operating Partnership had $543.4 million of secured debt subject
to third party credit enhancement.
As of December 31, 2010, scheduled maturities for the Operating Partnerships outstanding
mortgage indebtedness were at various dates through September 1, 2048. At December 31, 2010, the
interest rate range on the Operating Partnerships mortgage debt was 0.21% to 11.25%. During the
year ended December 31, 2010, the weighted average interest rate on the Operating Partnerships
mortgage debt was 4.79%.
The historical cost, net of accumulated depreciation, of encumbered properties was $5.6
billion and $5.8 billion at December 31, 2010 and 2009, respectively.
Aggregate payments of principal on mortgage notes payable for each of the next five years and
thereafter are as follows (amounts in thousands):
Year | Total | ||||
2011 |
$ | 597,100 | |||
2012 |
342,088 | ||||
2013 |
171,138 | ||||
2014 |
86,041 | ||||
2015 |
59,013 | ||||
Thereafter |
3,507,516 | ||||
Total |
$ | 4,762,896 | |||
As of December 31, 2009, the Operating Partnership had outstanding mortgage debt of
approximately $4.8 billion.
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Table of Contents
During the year ended December 31, 2009, the Operating Partnership:
| Repaid $956.8 million of mortgage loans; | ||
| Obtained $500.0 million of mortgage loan proceeds through the issuance of an 11-year cross-collateralized loan with an all-in fixed interest rate for 10 years at approximately 5.6% secured by 13 properties; | ||
| Obtained $40.0 million of new mortgage loans to accommodate the delayed sale of two properties that closed in January 2010; | ||
| Obtained $198.8 million of new mortgage loans on development properties; | ||
| Recognized a gain on early debt extinguishment of $2.4 million and wrote-off approximately $1.1 million of unamortized deferred financing costs; and | ||
| Was released from $17.3 million of mortgage debt assumed by the purchaser on two disposed properties. |
As of December 31, 2009, scheduled maturities for the Operating Partnerships outstanding
mortgage indebtedness were at various dates through September 1, 2048. At December 31, 2009, the
interest rate range on the Operating Partnerships mortgage debt was 0.20% to 12.465%. During the
year ended December 31, 2009, the weighted average interest rate on the Operating Partnerships
mortgage debt was 4.89%.
9. Notes
The following tables summarize the Operating Partnerships unsecured note balances and certain
interest rate and maturity date information as of and for the years ended December 31, 2010 and
2009, respectively:
Net | Interest | Weighted | Maturity | |||||||
December 31, 2010 | Principal | Rate | Average | Date | ||||||
(Amounts are in thousands) | Balance | Ranges | Interest Rate | Ranges | ||||||
Fixed Rate Public/Private Notes (1) |
$ | 4,375,860 | 3.85% - 7.57% | 5.78% | 2011 - 2026 | |||||
Floating Rate Public/Private Notes (1) |
809,320 | (1) | 1.72% | 2011 - 2013 | ||||||
Totals |
$ | 5,185,180 | ||||||||
Net | Interest | Weighted | Maturity | |||||||
December 31, 2009 | Principal | Rate | Average | Date | ||||||
(Amounts are in thousands) | Balance | Ranges | Interest Rate | Ranges | ||||||
Fixed Rate Public/Private Notes (1) |
$ | 3,771,700 | 3.85% - 7.57% | 5.93% | 2011 - 2026 | |||||
Floating Rate Public/Private Notes (1) |
801,824 | (1) | 1.37% | 2010 - 2013 | ||||||
Floating Rate Tax-Exempt Bonds |
35,600 | (2) | 0.37% | 2028 | ||||||
Totals |
$ | 4,609,124 | ||||||||
(1) | At December 31, 2010 and 2009, $300.0 million in fair value interest rate swaps converts a portion of the $400.0 million face value 5.200% notes due April 1, 2013 to a floating interest rate. | |
(2) | The floating interest rate is based on the 7-Day Securities Industry and Financial Markets Association (SIFMA) rate, which is the tax-exempt index equivalent of LIBOR. The interest rate is 0.27% at December 31, 2009. |
The Operating Partnerships unsecured public debt contains certain financial and
operating covenants including, among other things, maintenance of certain financial ratios. The
Operating Partnership was in compliance with its unsecured public debt covenants for both the years
ended December 31, 2010 and 2009.
An unlimited amount of equity and debt securities remains available for issuance by EQR and
the Operating Partnership under effective shelf registration statements filed with the SEC. Most
recently, EQR and the Operating Partnership filed a universal shelf registration statement for an
unlimited amount of equity and debt securities that became automatically effective upon filing with
the SEC in October 2010 (under SEC regulations enacted in 2005, the registration statement
automatically expires on October 14, 2013 and does not contain a maximum issuance amount).
Per the terms of ERPOPs partnership agreement, EQR contributes the net proceeds of all equity offerings to the capital of the Operating Partnership in
exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis) or preference units (on a one-for-one preferred share per preference unit basis).
During the year ended December 31, 2010, the Operating Partnership:
| Issued $600.0 million of ten-year 4.75% fixed rate public notes in a public offering at an all-in effective interest rate of 5.09%, receiving net proceeds of $595.4 million before underwriting fees and other expenses. |
During the year ended December 31, 2009, the Operating Partnership:
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Table of Contents
| Repurchased at par $105.2 million of its 4.75% fixed rate public notes due June 15, 2009 pursuant to a cash tender offer announced on January 16, 2009 and wrote-off approximately $79,000 of unamortized deferred financing costs and approximately $46,000 of unamortized discounts on notes payable; | ||
| Repaid the remaining $122.2 million of its 4.75% fixed rate public notes at maturity; | ||
| Repurchased at par $185.2 million of its 6.95% fixed rate public notes due March 2, 2011 pursuant to a cash tender offer announced on January 16, 2009 and wrote-off approximately $0.4 million of unamortized deferred financing costs and approximately $1.0 million of unamortized discounts on notes payable; | ||
| Repurchased $21.7 million of its 6.95% fixed rate public notes due March 2, 2011 at a price of 106% of par pursuant to a cash tender offer announced on December 2, 2009, recognized a loss on early debt extinguishment of $1.3 million and wrote-off approximately $0.2 million of unamortized net premiums on notes payable; | ||
| Repurchased $146.1 million of its 6.625% fixed rate public notes due March 15, 2012 at a price of 108% of par pursuant to a cash tender offer announced on December 2, 2009, recognized a loss on early debt extinguishment of $11.7 million and wrote-off approximately $0.3 million of unamortized deferred financing costs and approximately $0.2 million of unamortized net discounts on notes payable; | ||
| Repurchased $127.9 million of its 5.50% fixed rate public notes due October 1, 2012 at a price of 107% of par pursuant to a cash tender offer announced on December 2, 2009, recognized a loss on early debt extinguishment of $9.0 million and wrote-off approximately $0.5 million of unamortized deferred financing costs and approximately $0.4 million of unamortized discounts on notes payable; | ||
| Repurchased $75.8 million of its 5.20% fixed rate tax-exempt notes and wrote-off approximately $0.7 million of unamortized deferred financing costs; | ||
| Repurchased $17.5 million of its 3.85% convertible fixed rate public notes due August 15, 2026 at a price of 88.4% of par and recognized a gain on early debt extinguishment of $2.0 million and wrote-off approximately $0.1 million of unamortized deferred financing costs and approximately $0.8 million of unamortized discounts on notes payable; and | ||
| Repurchased at par $48.5 million of its 3.85% convertible fixed rate public notes due August 15, 2026 pursuant to a cash tender offer announced on December 2, 2009 and wrote-off approximately $0.3 million of unamortized deferred financing costs and approximately $1.5 million of unamortized discounts on notes payable. |
On October 11, 2007, the Operating Partnership closed on a $500.0 million senior unsecured
term loan. Effective April 12, 2010, the Operating Partnership exercised the first of its two
one-year extension options. As a result, the maturity date is now October 5, 2011 and there is one
remaining one-year extension option exercisable by the Operating Partnership. The Operating
Partnership has the ability to increase available borrowings by an additional $250.0 million under
certain circumstances. The loan bears interest at variable rates based upon LIBOR plus a spread
(currently 0.50%) dependent upon the current credit rating on the Operating Partnerships long-term
senior unsecured debt. EQR has guaranteed the Operating Partnerships term loan up to the maximum
amount and for the full term of the loan.
On August 23, 2006, the Operating Partnership issued $650.0 million of exchangeable senior
notes that mature on August 15, 2026. The notes have a current face value of $482.5 million at
December 31, 2010 and bear interest at a fixed rate of 3.85%. The notes are exchangeable into EQR
Common Shares, at the option of the holders, under specific circumstances or on or after August 15,
2025, at an initial and current exchange rate of 16.3934 shares per $1,000 principal amount of
notes (equivalent to an initial and current exchange price of $61.00 per share). The exchange rate
is subject to adjustment in certain circumstances, including upon an increase in EQRs dividend
rate at the time of issuance. Upon an exchange of the notes, the Operating Partnership will settle
any amounts up to the principal amount of the notes in cash and the remaining exchange value, if
any, will be settled, at the Operating Partnerships option, in cash, EQR Common Shares or a
combination of both. See Note 2 for more information on the change in the recognition of interest
expense for the exchangeable senior notes.
On or after August 18, 2011, the Operating Partnership may redeem the notes at a redemption
price equal to the principal amount of the notes plus any accrued and unpaid interest thereon. Upon
notice of redemption by the Operating Partnership, the holders may elect to exercise their exchange
rights. In addition, on August 18, 2011, August 15, 2016 and August 15, 2021 or following the
occurrence of certain change in control transactions prior to August 18, 2011, note holders may
require the Operating Partnership to repurchase the notes for an amount equal to the principal
amount of the notes plus any accrued and unpaid interest thereon.
Note holders may also require an exchange of the notes should the closing sale price of EQR
Common Shares exceed 130% of the exchange price for a certain period of time or should the trading
price on the notes be less than 98% of the product of the closing sales price of EQR Common Shares
multiplied by the applicable exchange rate for a certain period of time.
Aggregate payments of principal on unsecured notes payable for each of the next five years and
thereafter are as follows (amounts in thousands):
F-29
Table of Contents
Year | Total (1) | |||||
2011 (2) (3) | $ | 1,068,891 | ||||
2012 | 474,221 | |||||
2013 | 407,849 | |||||
2014 | 498,576 | |||||
2015 | 298,700 | |||||
Thereafter | 2,436,943 | |||||
Total | $ | 5,185,180 | ||||
(1) | Principal payments on unsecured notes include amortization of any discounts or premiums related to the notes. Premiums and discounts are amortized over the life of the unsecured notes. | |
(2) | Includes the Operating Partnerships $500.0 million term loan facility, which originally matured on October 5, 2010. Effective April 12, 2010, the Operating Partnership exercised the first of its two one-year extension options. As a result, the maturity date is now October 5, 2011 and there is one remaining one-year extension option exercisable by the Operating Partnership. | |
(3) | Includes $482.5 million face value of 3.85% convertible unsecured debt with a final maturity of 2026. |
10. Lines of Credit
The Operating Partnership has a $1.425 billion (net of $75.0 million which had been committed
by a now bankrupt financial institution and is not available for borrowing) unsecured revolving
credit facility maturing on February 28, 2012, with the ability to increase available borrowings by
an additional $500.0 million by adding additional banks to the facility or obtaining the agreement
of existing banks to increase their commitments. Advances under the credit facility bear interest
at variable rates based upon LIBOR at various interest periods plus a spread (currently 0.50%)
dependent upon the Operating Partnerships credit rating or based on bids received from the lending
group. EQR has guaranteed the Operating Partnerships credit facility up to the maximum amount and
for the full term of the facility.
As of December 31, 2010, the amount available on the credit facility was $1.28 billion (net of
$147.3 million which was restricted/dedicated to support letters of credit and net of the $75.0
million discussed above) and there was no amount outstanding. During the year ended December 31,
2010, the weighted average interest rate was 0.66%. As of December 31, 2009, the amount available
on the credit facility was $1.37 billion (net of $56.7 million which was restricted/dedicated to
support letters of credit and net of the $75.0 million discussed above). The Operating Partnership
did not draw and had no balance outstanding on its revolving credit facility at any time during the
year ended December 31, 2009.
11. Derivative and Other Fair Value Instruments
The valuation of financial instruments requires the Operating Partnership to make estimates
and judgments that affect the fair value of the instruments. The Operating Partnership, where
possible, bases the fair values of its financial instruments, including its derivative instruments,
on listed market prices and third party quotes. Where these are not available, the Operating
Partnership bases its estimates on current instruments with similar terms and maturities or on
other factors relevant to the financial instruments.
The carrying values of the Operating Partnerships mortgage notes payable and unsecured notes
were approximately $4.8 billion and $5.2 billion, respectively, at December 31, 2010. The fair
values of the Operating Partnerships mortgage notes payable and unsecured notes were approximately
$4.7 billion and $5.5 billion, respectively, at December 31, 2010. The carrying values of the
Operating Partnerships mortgage notes payable and unsecured notes were approximately $4.8 billion
and $4.6 billion, respectively, at December 31, 2009. The fair values of the Operating
Partnerships mortgage notes payable and unsecured notes were approximately $4.6 billion and $4.7
billion, respectively, at December 31, 2009. The fair values of the Operating Partnerships
financial instruments (other than mortgage notes payable, unsecured notes, derivative instruments
and investment securities) including cash and cash equivalents and other
financial instruments, approximate their carrying or contract values.
In the normal course of business, the Operating Partnership is exposed to the effect of
interest rate changes. The Operating Partnership seeks to manage these risks by following
established risk management policies and procedures including the use of derivatives to hedge
interest rate risk on debt instruments.
The following table summarizes the Operating Partnerships consolidated derivative instruments
at December 31, 2010 (dollar amounts are in thousands):
F-30
Table of Contents
Forward | Development | |||||||||||
Fair Value | Starting | Cash Flow | ||||||||||
Hedges (1) | Swaps (2) | Hedges (3) | ||||||||||
Current Notional Balance |
$ | 315,693 | $ | 950,000 | $ | 87,422 | ||||||
Lowest Possible Notional |
$ | 315,693 | $ | 950,000 | $ | 3,020 | ||||||
Highest Possible Notional |
$ | 317,694 | $ | 950,000 | $ | 91,343 | ||||||
Lowest Interest Rate |
2.009 | % | 3.478 | % | 4.059 | % | ||||||
Highest Interest Rate |
4.800 | % | 4.695 | % | 4.059 | % | ||||||
Earliest Maturity Date |
2012 | 2021 | 2011 | |||||||||
Latest Maturity Date |
2013 | 2023 | 2011 |
(1) | Fair Value Hedges Converts outstanding fixed rate debt to a floating interest rate. | |
(2) | Forward Starting Swaps Designed to partially fix the interest rate in advance of a planned future debt issuance. These swaps have mandatory counterparty terminations from 2012 through 2014, and $350.0 million, $400.0 million and $200.0 million are designated for 2011, 2012 and 2013 maturities, respectively. | |
(3) | Development Cash Flow Hedges Converts outstanding floating rate debt to a fixed interest rate. |
The following tables provide the location of the Operating Partnerships derivative
instruments within the accompanying Consolidated Balance Sheets and their fair market values as of
December 31, 2010 and 2009, respectively (amounts in thousands):
Asset Derivatives | Liability Derivatives | |||||||||||
Balance Sheet | Balance Sheet | |||||||||||
December 31, 2010 | Location | Fair Value | Location | Fair Value | ||||||||
Derivatives designated as hedging instruments: |
||||||||||||
Interest Rate Contracts: |
||||||||||||
Fair Value Hedges |
Other assets | $ | 12,521 | Other liabilities | $ | | ||||||
Forward Starting Swaps |
Other assets | 3,276 | Other liabilities | (37,756 | ) | |||||||
Development Cash Flow Hedges |
Other assets | | Other liabilities | (1,322 | ) | |||||||
Total |
$ | 15,797 | $ | (39,078 | ) | |||||||
Asset Derivatives | Liability Derivatives | |||||||||||
Balance Sheet | Balance Sheet | |||||||||||
December 31, 2009 | Location | Fair Value | Location | Fair Value | ||||||||
Derivatives designated as hedging instruments: |
||||||||||||
Interest Rate Contracts: |
||||||||||||
Fair Value Hedges |
Other assets | $ | 5,186 | Other liabilities | $ | | ||||||
Forward Starting Swaps |
Other assets | 23,630 | Other liabilities | | ||||||||
Development Cash Flow Hedges |
Other assets | | Other liabilities | (3,577 | ) | |||||||
Total |
$ | 28,816 | $ | (3,577 | ) | |||||||
The following tables provide a summary of the effect of fair value hedges on the
Operating Partnerships accompanying Consolidated Statements of Operations for the years ended
December 31, 2010 and 2009, respectively (amounts in thousands):
Location of Gain/(Loss) | Amount of Gain/(Loss) | Income Statement | Amount of Gain/(Loss) | |||||||||||
December 31, 2010 | Recognized in Income | Recognized in Income | Location of Hedged | Recognized in Income | ||||||||||
Type of Fair Value Hedge | on Derivative | on Derivative | Hedged Item | Item Gain/(Loss) | on Hedged Item | |||||||||
Derivatives designated as hedging instruments: |
||||||||||||||
Interest Rate Contracts: |
||||||||||||||
Interest Rate Swaps |
Interest expense | $ | 7,335 | Fixed rate debt | Interest expense | $ | (7,335 | ) | ||||||
Total |
$ | 7,335 | $ | (7,335 | ) | |||||||||
F-31
Table of Contents
Location of Gain/(Loss) | Amount of Gain/(Loss) | Income Statement | Amount of Gain/(Loss) | |||||||||||
December 31, 2009 | Recognized in Income | Recognized in Income | Location of Hedged | Recognized in Income | ||||||||||
Type of Fair Value Hedge | on Derivative | on Derivative | Hedged Item | Item Gain/(Loss) | on Hedged Item | |||||||||
Derivatives designated as hedging instruments: |
||||||||||||||
Interest Rate Contracts: |
||||||||||||||
Interest Rate Swaps |
Interest expense | $ | (1,167 | ) | Fixed rate debt | Interest expense | $ | 1,167 | ||||||
Total |
$ | (1,167 | ) | $ | 1,167 | |||||||||
The following tables provide a summary of the effect of cash flow hedges on the Operating
Partnerships accompanying Consolidated Statements of Operations for the years ended December 31,
2010 and 2009, respectively (amounts in thousands):
Effective Portion | Ineffective Portion | |||||||||||||||
Amount of | Location of Gain/(Loss) | Amount of Gain/(Loss) | Location of | Amount of Gain/(Loss) | ||||||||||||
Gain/(Loss) | Reclassified from | Reclassified from | Gain/(Loss) | Reclassified from | ||||||||||||
December 31, 2010 | Recognized in OCI | Accumulated OCI | Accumulated OCI | Recognized in Income | Accumulated OCI | |||||||||||
Type of Cash Flow Hedge | on Derivative | into Income | into Income | on Derivative | into Income | |||||||||||
Derivatives designated as hedging instruments: |
||||||||||||||||
Interest Rate Contracts: |
||||||||||||||||
Forward Starting Swaps/Treasury Locks |
$ | (68,149 | ) | Interest expense | $ | (3,338 | ) | N/A | $ | | ||||||
Development Interest Rate Swaps/Caps |
2,255 | Interest expense | | N/A | | |||||||||||
Total |
$ | (65,894 | ) | $ | (3,338 | ) | $ | | ||||||||
Effective Portion | Ineffective Portion | |||||||||||||||
Amount of | Location of Gain/(Loss) | Amount of Gain/(Loss) | Location of | Amount of Gain/(Loss) | ||||||||||||
Gain/(Loss) | Reclassified from | Reclassified from | Gain/(Loss) | Reclassified from | ||||||||||||
December 31, 2009 | Recognized in OCI | Accumulated OCI | Accumulated OCI | Recognized in Income | Accumulated OCI | |||||||||||
Type of Cash Flow Hedge | on Derivative | into Income | into Income | on Derivative | into Income | |||||||||||
Derivatives designated as hedging instruments: |
||||||||||||||||
Interest Rate Contracts: |
||||||||||||||||
Forward Starting Swaps/Treasury Locks |
$ | 34,432 | Interest expense | $ | (3,724 | ) | N/A | $ | | |||||||
Development Interest Rate Swaps/Caps |
3,244 | Interest expense | | N/A | | |||||||||||
Total |
$ | 37,676 | $ | (3,724 | ) | $ | | |||||||||
As of December 31, 2010 and 2009, there were approximately $58.3 million in deferred
losses, net, included in accumulated other comprehensive (loss) and $4.2 million in deferred gains,
net, included in accumulated other comprehensive income, respectively, related to derivative
instruments. Based on the estimated fair values of the net derivative instruments at December 31,
2010, the Operating Partnership may recognize an estimated $5.6 million of accumulated other
comprehensive (loss) as additional interest expense during the year ending December 31, 2011.
In July 2010, the Operating Partnership paid approximately $10.0 million to settle a forward
starting swap in conjunction with the issuance of $600.0 million of ten-year fixed rate public
notes. The entire amount was deferred as a component of accumulated other comprehensive loss and
is being recognized as an increase to interest expense over the term of the notes.
In January 2009, the Operating Partnership received approximately $0.4 million to terminate a
fair value hedge of interest rates in conjunction with the public tender of the Operating
Partnerships 4.75% fixed rate public notes due June 15, 2009. Approximately $0.2 million of the
settlement received was deferred and recognized as a reduction of interest expense through the
maturity on June 15, 2009.
In April and May 2009, the Operating Partnership received approximately $10.8 million to
terminate six treasury locks in conjunction with the issuance of a $500.0 million 11-year mortgage
loan. The entire amount was deferred as a component of accumulated other comprehensive income and
is recognized as a reduction of interest expense over the first ten years of the mortgage loan.
During the year ended December 31, 2009, the Operating Partnership sold a majority of its
investment securities, receiving proceeds of approximately $215.8 million, and recorded a $4.9
million realized gain on sale (specific identification) which is included in interest and other
income. The following tables set forth the maturity, amortized cost, gross unrealized gains and
losses, book/fair value and interest and other income of the various investment securities held as
of December 31, 2010 and 2009, respectively (amounts in thousands):
F-32
Table of Contents
Other Assets | ||||||||||||||||||||||
December 31, 2010 | Amortized | Unrealized | Unrealized | Book/ | Interest and | |||||||||||||||||
Security | Maturity | Cost | Gains | Losses | Fair Value | Other Income | ||||||||||||||||
Available-for-Sale |
||||||||||||||||||||||
FDIC-insured certificates of deposit |
Less than one year | $ | | $ | | $ | | $ | | $ | 61 | |||||||||||
Other |
N/A | 675 | 519 | | 1,194 | | ||||||||||||||||
Total Available-for-Sale and Grand Total |
$ | 675 | $ | 519 | $ | | $ | 1,194 | $ | 61 | ||||||||||||
Other Assets | ||||||||||||||||||||||
December 31, 2009 | Amortized | Unrealized | Unrealized | Book/ | Interest and | |||||||||||||||||
Security | Maturity | Cost | Gains | Losses | Fair Value | Other Income | ||||||||||||||||
Held-to-Maturity |
||||||||||||||||||||||
FDIC-insured promissory notes |
Less than one year | $ | | $ | | $ | | $ | | $ | 458 | |||||||||||
Total Held-to-Maturity |
| | | | 458 | |||||||||||||||||
Available-for-Sale |
||||||||||||||||||||||
FDIC-insured certificates of deposit |
Less than one year | 25,000 | 93 | | 25,093 | 491 | ||||||||||||||||
Other |
Between one and five years or N/A | 675 | 370 | | 1,045 | 7,754 | ||||||||||||||||
Total Available-for-Sale |
25,675 | 463 | | 26,138 | 8,245 | |||||||||||||||||
Grand Total |
$ | 25,675 | $ | 463 | $ | | $ | 26,138 | $ | 8,703 | ||||||||||||
A three-level valuation hierarchy exists for disclosure of fair value measurements. The
valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or
liability as of the measurement date. A financial instruments categorization within the valuation
hierarchy is based upon the lowest level of input that is significant to the fair value
measurement. The three levels are defined as follows:
| Level 1 Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | ||
| Level 2 Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | ||
| Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
The Operating Partnerships derivative positions are valued using models developed by the
respective counterparty as well as models developed internally by the Operating Partnership that
use as their basis readily observable market parameters (such as forward yield curves and credit
default swap data) and are classified within Level 2 of the valuation hierarchy. In addition,
employee holdings other than EQR Common Shares within the supplemental executive retirement plan
(the SERP) have a fair value of $58.1 million as of December 31, 2010 and are included in other
assets and other liabilities on the consolidated balance sheet. These SERP investments are valued
using quoted market prices for identical assets and are classified within Level 1 of the valuation
hierarchy.
The Operating Partnerships investment securities are valued using quoted market prices or
readily available market interest rate data. The quoted market prices are classified within Level 1
of the valuation hierarchy and the market interest rate data are classified within Level 2 of the
valuation hierarchy. Redeemable Limited Partners are valued using the quoted market price of EQR
Common Shares and are classified within Level 2 of the valuation hierarchy.
The Operating Partnerships real estate asset impairment charges were the result of an
analysis of the parcels estimated fair value (determined using internally developed models that
were based on market assumptions and comparable sales data) (Level 3) compared to their current
capitalized carrying value. The market assumptions used as inputs to the Operating Partnerships
fair value model include construction costs, leasing assumptions, growth rates, discount rates,
terminal capitalization rates and development yields, along with the Operating Partnerships
current plans for each individual asset. The Operating Partnership uses data on its existing
portfolio of properties and its recent acquisition and development properties, as well as similar
market data from third party sources, when available, in determining these inputs. The valuation
techniques used to measure fair value is consistent with how similar assets were
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measured in prior periods. See Note 20 for further discussion.
12. Earnings Per Unit
The following tables set forth the computation of net income per Unit basic and net income
per Unit diluted (amounts in thousands except per Unit amounts):
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Numerator for net income per Unit basic and diluted (1): |
||||||||||||
(Loss) income from continuing operations |
$ | (19,844 | ) | $ | 2,931 | $ | (40,054 | ) | ||||
Net loss (income) attributable to Noncontrolling Interests Partially Owned Properties |
726 | 558 | (2,650 | ) | ||||||||
Allocation to Preference Units |
(14,368 | ) | (14,479 | ) | (14,507 | ) | ||||||
Allocation to Preference Interests and Junior Preference Units |
| (9 | ) | (15 | ) | |||||||
(Loss) from continuing operations available to Units |
(33,486 | ) | (10,999 | ) | (57,226 | ) | ||||||
Discontinued operations, net |
315,827 | 379,098 | 476,467 | |||||||||
Numerator for net income per Unit basic and diluted (1) |
$ | 282,341 | $ | 368,099 | $ | 419,241 | ||||||
Denominator for net income per Unit basic and diluted (1) |
296,527 | 289,167 | 287,631 | |||||||||
Net income per Unit basic |
$ | 0.95 | $ | 1.27 | $ | 1.46 | ||||||
Net income per Unit diluted |
$ | 0.95 | $ | 1.27 | $ | 1.46 | ||||||
Net income per Unit basic: |
||||||||||||
(Loss) from continuing operations available to Units |
$ | (0.113 | ) | $ | (0.038 | ) | $ | (0.199 | ) | |||
Discontinued operations, net |
1.065 | 1.309 | 1.655 | |||||||||
Net income per Unit basic |
$ | 0.952 | $ | 1.271 | $ | 1.456 | ||||||
Net income per Unit diluted (1): |
||||||||||||
(Loss) from continuing operations available to Units |
$ | (0.113 | ) | $ | (0.038 | ) | $ | (0.199 | ) | |||
Discontinued operations, net |
1.065 | 1.309 | 1.655 | |||||||||
Net income per Unit diluted |
$ | 0.952 | $ | 1.271 | $ | 1.456 | ||||||
Distributions declared per Unit outstanding |
$ | 1.47 | $ | 1.64 | $ | 1.93 | ||||||
(1) | Potential Units issuable from the assumed exercise/vesting of EQR long-term compensation award shares/units are automatically anti-dilutive and therefore excluded from the diluted earnings per Unit calculation as the Operating Partnership had a loss from continuing operations for the years ended December 31, 2010, 2009 and 2008, respectively. |
Convertible preference interests/units that could be converted into 325,103, 402,501 and 427,090
weighted average Common Shares (which would be contributed to the Operating Partnership in exchange
for OP Units) for the years ended December 31, 2010, 2009 and 2008, respectively, were outstanding
but were not included in the computation of diluted earnings per Unit because the effects would be
anti-dilutive. In addition, the effect of the Common Shares/OP Units that could ultimately be
issued upon the conversion/exchange of the Operating Partnerships $650.0 million ($482.5 million
outstanding at December 31, 2010) exchangeable senior notes was not included in the computation of
diluted earnings per Unit because the effects would be anti-dilutive.
For additional disclosures regarding the employee share options and restricted shares, see Notes 2
and 14.
13. Discontinued Operations
The Operating Partnership has presented separately as discontinued operations in all periods
the results of operations for all consolidated assets disposed of and all properties held for sale,
if any.
The components of discontinued operations are outlined below and include the results of
operations for the respective periods that the Operating Partnership owned such assets during each
of the years ended December 31, 2010,
2009 and 2008 (amounts in thousands).
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Table of Contents
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
REVENUES |
||||||||||||
Rental income |
$ | 67,670 | $ | 160,031 | $ | 261,924 | ||||||
Total revenues |
67,670 | 160,031 | 261,924 | |||||||||
EXPENSES (1) |
||||||||||||
Property and maintenance |
18,659 | 49,088 | 75,079 | |||||||||
Real estate taxes and insurance |
7,028 | 18,065 | 28,764 | |||||||||
Property management |
| | (62 | ) | ||||||||
Depreciation |
16,770 | 41,104 | 66,625 | |||||||||
General and administrative |
36 | 34 | 29 | |||||||||
Total expenses |
42,493 | 108,291 | 170,435 | |||||||||
Discontinued operating income |
25,177 | 51,740 | 91,489 | |||||||||
Interest and other income |
497 | 120 | 427 | |||||||||
Other expenses |
| (1 | ) | | ||||||||
Interest (2): |
||||||||||||
Expense incurred, net |
(7,722 | ) | (8,660 | ) | (10,093 | ) | ||||||
Amortization of deferred financing costs |
(37 | ) | (561 | ) | (54 | ) | ||||||
Income and other tax (expense) benefit |
(44 | ) | 1,161 | 1,841 | ||||||||
Discontinued operations |
17,871 | 43,799 | 83,610 | |||||||||
Net gain on sales of discontinued operations |
297,956 | 335,299 | 392,857 | |||||||||
Discontinued operations, net |
$ | 315,827 | $ | 379,098 | $ | 476,467 | ||||||
(1) | Includes expenses paid in the current period for properties sold or held for sale in prior periods related to the Operating Partnerships period of ownership. | |
(2) | Includes only interest expense specific to secured mortgage notes payable for properties sold and/or held for sale. |
For the properties sold during 2010, the investment in real estate, net of accumulated
depreciation, and the mortgage notes payable balances at December 31, 2009 were $430.5 million and
$89.4 million, respectively.
14. Share Incentive Plans
Any Common Shares issued pursuant to EQRs incentive equity compensation and employee share purchase
plans will result in the Operating Partnership issuing OP units to EQR on a one-for-one basis with
the Operating Partnership receiving the net cash proceeds of such issuances.
On May 15, 2002, the shareholders of EQR approved the Companys 2002 Share Incentive Plan. The
maximum aggregate number of awards that may be granted under this plan may not exceed 7.5% of the
Companys outstanding Common Shares calculated on a fully diluted basis and determined annually
on the first day of each calendar year. As of January 1, 2011, this amount equaled 22,785,696, of
which 5,395,739 shares were available for future issuance. No awards may be granted under the 2002
Share Incentive Plan, as restated, after February 20, 2012.
Pursuant to the 2002 Share Incentive Plan, as restated, and the Amended and Restated 1993
Share Option and Share Award Plan, as amended (collectively the Share Incentive Plans), officers,
trustees and key employees of the Company may be granted share options to acquire Common Shares
(Options) including non-qualified share options (NQSOs), incentive share options (ISOs) and
share appreciation rights (SARs), or may be granted restricted or non-restricted shares, subject
to conditions and restrictions as described in the Share Incentive Plans. In addition, each year
prior to 2007, certain executive officers of the Company participated in the Companys
performance-based restricted share plan. Effective January 1, 2007, the Company elected to
discontinue the award of performance-based award grants. Options, SARs, restricted shares,
performance shares and LTIP Units (see discussion below) are sometimes collectively referred to
herein as Awards.
The Options are generally granted at the fair market value of the Companys Common Shares at
the date of grant, vest in three equal installments over a three-year period, are exercisable upon
vesting and expire ten years from the date of grant. The exercise price for all Options under the
Share Incentive Plans is equal to the fair market value of the underlying Common Shares at the time
the Option is granted. Options exercised result in new Common Shares being issued on the open
market. The Amended and Restated 1993 Share Option and Share Award Plan, as amended, will terminate
at such time as all
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outstanding Awards have expired or have been exercised/vested. The Board of
Trustees may at any time amend or terminate the Share Incentive Plans, but termination will not
affect Awards previously granted. Any Options which had vested prior to such a termination would
remain exercisable by the holder.
Restricted shares that have been awarded through December 31, 2010 generally vest three years
from the award date. In addition, the Companys unvested restricted shareholders have the same
voting rights as any other Common Share holder. During the three-year period of restriction, the
Companys unvested restricted shareholders receive quarterly dividend payments on their shares at
the same rate and on the same date as any other Common Share holder. As a result, dividends paid on
unvested restricted shares are included as a component of retained earnings (included in general
partners capital) and have not been considered in reducing net income available to Units in a
manner similar to the Operating Partnerships preference unit dividends for the earnings per Unit
calculation. If employment is terminated prior to the lapsing of the restriction, the shares are
generally canceled.
In December 2008, the Companys 2002 Share Incentive Plan was amended to allow for the
issuance of long-term incentive plan units (LTIP Units) to officers of the Company as an
alternative to the Companys restricted shares. LTIP Units are a class of partnership interests
that under certain conditions, including vesting, are convertible by the holder into an equal
number of OP Units, which are redeemable by the holder for EQR Common Shares on a one-for-one basis
or the cash value of such shares at the option of the Operating Partnership. In connection with the
February 2009 grant of long-term incentive compensation for services provided during 2008, officers
of the Company were allowed to choose, on a one-for-one basis, between restricted shares and LTIP
Units. Similar to restricted shares, LTIP Units generally vest three years from the award date. In
addition, LTIP Unit holders receive quarterly dividend payments on their LTIP Units at the same
rate and on the same date as any other OP Unit holder. As a result, dividends paid on LTIP Units
are included as a component of Limited Partners capital and have not been considered in reducing
net income available to Units in a manner similar to the Operating Partnerships preference unit
dividends for the earnings per Unit calculation. If employment is terminated prior to vesting, the
LTIP Units are generally canceled. An LTIP Unit will automatically convert to an OP Unit when the
capital account of each LTIP Unit increases (books-up) to a specified target. If the capital
target is not attained within ten years following the date of issuance, the LTIP Unit will
automatically be canceled and no compensation will be payable to the holder of such canceled LTIP
Unit.
EQRs Share Incentive Plans provide for certain benefits upon retirement at or after age 62.
As of November 4, 2008, but effective as of January 1, 2009, EQR changed the definition of
retirement for employees (including all officers but not non-employee members of EQRs Board of
Trustees) under its Share Incentive Plans. For employees hired prior to January 1, 2009, retirement
generally will mean the termination of employment (other than for cause): (i) on or after age 62;
or (ii) prior to age 62 after meeting the requirements of the Rule of 70 (described below). For
employees hired after January 1, 2009, retirement generally will mean the termination of employment
(other than for cause) after meeting the requirements of the Rule of 70.
The Rule of 70 is met when an employees years of service with EQR (which must be at least 15
years) plus his or her age (which must be at least 55 years) on the date of termination equals or
exceeds 70 years. In addition, the employee must give EQR at least 6 months advance written notice
of his or her intention to retire and sign a release upon termination of employment, releasing EQR
from customary claims and agreeing to ongoing non-competition and employee non-solicitation
provisions.
John Powers, Executive Vice President Human Resources, became eligible for retirement in
2009 as he turned 62. Frederick C. Tuomi, President Property Management, became eligible for
retirement under the Rule of 70 in 2009. Bruce C. Strohm, Executive Vice President and General
Counsel, became eligible for retirement under the Rule of 70 in 2010. David J. Neithercut, Chief
Executive Officer and President, will become eligible for retirement under the Rule of 70 in 2011.
For employees hired prior to January 1, 2009, who retire at or after age 62, such employees
unvested restricted shares, LTIP Units and share options would immediately vest, and share options
would continue to be exercisable for the balance of the applicable ten-year option period, as was
provided under the Share Incentive Plans prior to the adoption of the Rule of 70. For all other
employees (those hired after January 1, 2009 and those hired before such date who choose to retire
prior to age 62), upon such retirement under the new Rule of 70 definition of retirement of
employees, such employees unvested restricted shares, LTIP Units and share options would continue
to vest per the original vesting
schedule (subject to immediate vesting upon the occurrence of a subsequent change in control of EQR
or the employees death), and options would continue to be exercisable for the balance of the
applicable ten-year option period, subject to the employees compliance with the non-competition
and employee non-solicitation provisions. If an employee violates these provisions after such
retirement, all unvested restricted shares, unvested LTIP Units and unvested and vested share
options at the time of the violation would be void, unless otherwise determined by the Compensation
Committee of EQRs Board of Trustees.
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Table of Contents
The following tables summarize compensation information regarding the performance shares,
restricted shares, LTIP Units, share options and Employee Share Purchase Plan (ESPP) for the
three years ended December 31, 2010, 2009 and 2008 (amounts in thousands):
Year Ended December 31, 2010 | ||||||||||||||||
Compensation | Compensation | Compensation | Dividends | |||||||||||||
Expense | Capitalized | Equity | Incurred | |||||||||||||
Restricted shares |
$ | 8,603 | $ | 1,178 | $ | 9,781 | $ | 1,334 | ||||||||
LTIP Units |
2,334 | 190 | 2,524 | 138 | ||||||||||||
Share options |
6,707 | 714 | 7,421 | | ||||||||||||
ESPP discount |
1,231 | 59 | 1,290 | | ||||||||||||
Total |
$ | 18,875 | $ | 2,141 | $ | 21,016 | $ | 1,472 | ||||||||
Year Ended December 31, 2009 | ||||||||||||||||
Compensation | Compensation | Compensation | Dividends | |||||||||||||
Expense | Capitalized | Equity | Incurred | |||||||||||||
Performance shares |
$ | 103 | $ | 76 | $ | 179 | $ | | ||||||||
Restricted shares |
10,065 | 1,067 | 11,132 | 1,627 | ||||||||||||
LTIP Units |
1,036 | 158 | 1,194 | 254 | ||||||||||||
Share options |
5,458 | 538 | 5,996 | | ||||||||||||
ESPP discount |
1,181 | 122 | 1,303 | | ||||||||||||
Total |
$ | 17,843 | $ | 1,961 | $ | 19,804 | $ | 1,881 | ||||||||
Year Ended December 31, 2008 | ||||||||||||||||
Compensation | Compensation | Compensation | Dividends | |||||||||||||
Expense | Capitalized | Equity | Incurred | |||||||||||||
Performance shares |
$ | (8 | ) | $ | | $ | (8 | ) | $ | | ||||||
Restricted shares |
15,761 | 1,517 | 17,278 | 2,175 | ||||||||||||
Share options |
5,361 | 485 | 5,846 | | ||||||||||||
ESPP discount |
1,197 | 92 | 1,289 | | ||||||||||||
Total |
$ | 22,311 | $ | 2,094 | $ | 24,405 | $ | 2,175 | ||||||||
Compensation expense is generally recognized for Awards as follows:
| Restricted shares, LTIP Units and share options Straight-line method over the vesting period of the options or shares regardless of cliff or ratable vesting distinctions. | ||
| Performance shares Accelerated method with each vesting tranche valued as a separate award, with a separate vesting date, consistent with the estimated value of the award at each period end. | ||
| ESPP discount Immediately upon the purchase of common shares each quarter. |
The Company accelerates the recognition of compensation expense for all Awards for those
individuals approaching or meeting the retirement age criteria discussed above. The total
compensation expense related to Awards not yet vested at December 31, 2010 is $19.5 million, which
is expected to be recognized over a weighted average term of 1.5 years.
See Note 2 for additional information regarding the Companys share-based compensation.
The table below summarizes the Award activity of the Share Incentive Plans for the three years
ended December 31, 2010, 2009 and 2008:
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Table of Contents
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Common | Average | Average Fair | Average Fair | |||||||||||||||||||||
Shares Subject | Exercise Price | Restricted | Value per | LTIP | Value per | |||||||||||||||||||
to Options | per Option | Shares | Restricted Share | Units | LTIP Unit | |||||||||||||||||||
Balance at December 31, 2007 |
9,185,141 | $ | 32.37 | 1,178,188 | $ | 42.30 | ||||||||||||||||||
Awards granted (1) |
1,436,574 | $ | 38.46 | 524,983 | $ | 38.29 | ||||||||||||||||||
Awards exercised/vested (2) (3) |
(995,129 | ) | $ | 24.75 | (644,131 | ) | $ | 35.99 | ||||||||||||||||
Awards forfeited |
(113,786 | ) | $ | 43.95 | (63,029 | ) | $ | 44.87 | ||||||||||||||||
Awards expired |
(39,541 | ) | $ | 35.91 | | | ||||||||||||||||||
Balance at December 31, 2008 |
9,473,259 | $ | 33.94 | 996,011 | $ | 44.16 | | | ||||||||||||||||
Awards granted (1) |
2,541,005 | $ | 23.08 | 362,997 | $ | 22.62 | 155,189 | $ | 21.11 | |||||||||||||||
Awards exercised/vested (2) (3) |
(422,713 | ) | $ | 21.62 | (340,362 | ) | $ | 42.67 | | | ||||||||||||||
Awards forfeited |
(146,151 | ) | $ | 30.07 | (64,280 | ) | $ | 35.28 | (573 | ) | $ | 21.11 | ||||||||||||
Awards expired |
(95,650 | ) | $ | 32.21 | | | | | ||||||||||||||||
Balance at December 31, 2009 |
11,349,750 | $ | 32.03 | 954,366 | $ | 37.10 | 154,616 | $ | 21.11 | |||||||||||||||
Awards granted (1) |
1,436,115 | $ | 33.59 | 270,805 | $ | 34.85 | 94,096 | $ | 32.97 | |||||||||||||||
Awards exercised/vested (2) (3) |
(2,506,645 | ) | $ | 28.68 | (278,183 | ) | $ | 52.25 | | | ||||||||||||||
Awards forfeited |
(76,275 | ) | $ | 29.43 | (35,038 | ) | $ | 30.84 | (1,204 | ) | $ | 21.11 | ||||||||||||
Awards expired |
(96,457 | ) | $ | 42.69 | | | | | ||||||||||||||||
Balance at December 31, 2010 |
10,106,488 | $ | 33.00 | 911,950 | $ | 32.05 | 247,508 | $ | 25.62 | |||||||||||||||
(1) | The weighted average grant date fair value for Options granted during the years ended December 31, 2010, 2009 and 2008 was $6.18 per share, $3.38 per share and $4.08 per share, respectively. | |
(2) | The aggregate intrinsic value of options exercised during the years ended December 31, 2010, 2009 and 2008 was $39.6 million, $2.8 million and $15.6 million, respectively. These values were calculated as the difference between the strike price of the underlying awards and the per share price at which each respective award was exercised. | |
(3) | The fair value of restricted shares vested during the years ended December 31, 2010, 2009 and 2008 was $9.1 million, $8.0 million and $23.9 million, respectively. |
The following table summarizes information regarding options outstanding and exercisable
at December 31, 2010:
Options Outstanding (1) | Options Exercisable (2) | |||||||||||||||||||
Weighted | ||||||||||||||||||||
Average | Weighted | Weighted | ||||||||||||||||||
Remaining | Average | Average | ||||||||||||||||||
Contractual | Exercise | Exercise | ||||||||||||||||||
Range of Exercise Prices | Options | Life in Years | Price | Options | Price | |||||||||||||||
$21.40 to $26.75 |
2,974,937 | 6.18 | $ | 23.42 | 1,403,771 | $ | 23.82 | |||||||||||||
$26.76 to $32.10 |
2,478,594 | 3.09 | $ | 29.99 | 2,478,594 | $ | 29.99 | |||||||||||||
$32.11 to $37.45 |
1,374,888 | 9.01 | $ | 32.96 | 23,546 | $ | 32.23 | |||||||||||||
$37.46 to $42.80 |
2,363,450 | 5.87 | $ | 40.44 | 2,023,316 | $ | 40.75 | |||||||||||||
$42.81 to $48.15 |
4,202 | 5.32 | $ | 45.25 | 4,202 | $ | 45.25 | |||||||||||||
$48.16 to $53.50 |
910,417 | 6.09 | $ | 53.19 | 853,222 | $ | 53.50 | |||||||||||||
$21.40 to $53.50 |
10,106,488 | 5.73 | $ | 33.00 | 6,786,651 | $ | 34.89 | |||||||||||||
Vested and expected to vest
as of December 31, 2010 |
9,718,763 | 5.69 | $ | 33.12 | ||||||||||||||||
(1) | The aggregate intrinsic value of options outstanding that are vested and expected to vest as of December 31, 2010 is $184.3 million. | |
(2) | The aggregate intrinsic value and weighted average remaining contractual life in years of options exercisable as of December 31, 2010 is $117.1 million and 4.4 years, respectively. |
Note: The aggregate intrinsic values in Notes (1) and (2) above were both calculated as the
excess, if any, between the Companys closing share price of $51.95 per share on December 31, 2010
and the strike price of the underlying awards.
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Table of Contents
As of December 31, 2009 and 2008, 7,974,815 Options (with a weighted average exercise
price of $33.55) and 7,522,344 Options (with a weighted average exercise price of $31.58) were
exercisable, respectively.
15. Employee Plans
The Company established an Employee Share Purchase Plan to provide each employee and EQR
trustee the ability to annually acquire up to $100,000 of Common Shares of EQR. In 2003, EQRs
shareholders approved an increase in the aggregate number of Common Shares available under the ESPP
to 7,000,000 (from 2,000,000). The Company has 3,403,970 Common Shares available for purchase under
the ESPP at December 31, 2010. The Common Shares may be purchased quarterly at a price equal to 85%
of the lesser of: (a) the closing price for a share on the last day of such quarter; and (b) the
greater of: (i) the closing price for a share on the first day of such quarter, and (ii) the
average closing price for a share for all the business days in the quarter. The following table
summarizes information regarding the Common Shares issued under the ESPP (the net proceeds noted
below were contributed to the Operating Partnership in exchange for OP Units):
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Amounts in thousands except share and per share amounts) | ||||||||||||
Shares issued |
157,363 | 324,394 | 195,961 | |||||||||
Issuance price ranges |
$ | 28.26 - $41.16 | $ | 14.21 $24.84 | $ | 23.51 $37.61 | ||||||
Issuance proceeds |
$ | 5,112 | $ | 5,292 | $ | 6,170 |
The Company established a defined contribution plan (the 401(k) Plan) to provide
retirement benefits for employees that meet minimum employment criteria. The Operating Partnership,
on behalf of the Company, matches dollar for dollar up to the first 3% of eligible compensation
that a participant contributes to the 401(k) Plan. Participants are vested in the Companys
contributions over five years. The Operating Partnership recognized an expense in the amount of
$4.0 million, $3.5 million and $3.8 million for the years ended December 31, 2010, 2009 and 2008,
respectively.
The Operating Partnership, on behalf of the Company, may also elect to make an annual
discretionary profit-sharing contribution as a percentage of each individual employees eligible
compensation under the 401(k) Plan. The Operating Partnership did not make a contribution for the
years ended December 31, 2010, 2009 and 2008 and as such, no expense was recognized in these years.
The Company established a supplemental executive retirement plan (the SERP) to provide
certain officers and EQR trustees an opportunity to defer a portion of their eligible compensation
in order to save for retirement. The SERP is restricted to investments in EQR Common Shares,
certain marketable securities that have been specifically approved and cash equivalents. The
deferred compensation liability represented in the SERP and the securities issued to fund such
deferred compensation liability are consolidated by the Operating Partnership and carried on the
Operating Partnerships balance sheet, and the Companys Common Shares held in the SERP are
accounted for as a reduction to General Partners capital.
16. Distribution Reinvestment and Share Purchase Plan
On November 3, 1997, the Company filed with the SEC a Form S-3 Registration Statement to
register 14,000,000 Common Shares pursuant to a Distribution Reinvestment and Share Purchase Plan
(the DRIP Plan). The registration statement was declared effective on November 25, 1997. The
remaining shares available for issuance under the 1997 registration lapsed in December 2008.
On December 16, 2008, the Company filed with the SEC a Form S-3 Registration Statement to
register 5,000,000 Common Shares under the DRIP Plan. The registration statement was automatically
declared effective the same day and expires at the earlier of the date in which all 5,000,000
shares have been issued or December 15, 2011. The Company has 4,905,736 Common Shares available for
issuance under the DRIP Plan at December 31, 2010.
The DRIP Plan provides holders of record and beneficial owners of Common Shares and Preferred
Shares with a simple and convenient method of investing cash distributions in additional Common
Shares (which is referred to herein as the Dividend Reinvestment DRIP Plan). Common Shares may
also be purchased on a monthly basis with optional cash payments made by participants in the DRIP
Plan and interested new investors, not currently shareholders of EQR, at the market price of the
Common Shares less a discount ranging between 0% and 5%, as determined in accordance with the DRIP
Plan (which is referred to herein as the Share Purchase DRIP Plan). Common Shares purchased
under the DRIP Plan may, at the option of EQR, be directly issued by EQR or purchased by EQRs transfer agent in the
open market using participants funds. The net proceeds from any Common Share issuances are
contributed to the Operating Partnership in exchange for OP Units.
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17. Transactions with Related Parties
Pursuant to the terms of the partnership agreement for the Operating Partnership, the
Operating Partnership is required to reimburse EQR for all expenses incurred by EQR in excess of
income earned by EQR through its indirect 1% ownership of various entities. Amounts paid on behalf
of EQR are reflected in the consolidated statements of operations as general and administrative
expenses.
The Operating Partnership provided asset and property management services to certain related
entities for properties not owned by the Operating Partnership, which terminated in December 2008.
Fees received for providing such services were approximately $0.3 million for the year ended
December 31, 2008.
The Operating Partnership leases its corporate headquarters from an entity controlled by EQRs
Chairman of the Board of Trustees. The lease terminates on July 31, 2021. Amounts incurred for such
office space for the years ended December 31, 2010, 2009 and 2008, respectively, were approximately
$2.7 million, $3.0 million and $2.9 million. The Operating Partnership believes these amounts equal
market rates for such rental space.
18.
Commitments and Contingencies
The Operating Partnership, as an owner of real estate, is subject to various Federal, state
and local environmental laws. Compliance by the Operating Partnership with existing laws has not
had a material adverse effect on the Operating Partnership. However, the Operating Partnership
cannot predict the impact of new or changed laws or regulations on its current properties or on
properties that it may acquire in the future.
The Operating Partnership is party to a housing discrimination lawsuit brought by a non-profit
civil rights organization in April 2006 in the U.S. District Court for the District of Maryland.
The suit alleges that the Operating Partnership designed and built approximately 300 of its
properties in violation of the accessibility requirements of the Fair Housing Act and Americans
With Disabilities Act. The suit seeks actual and punitive damages, injunctive relief (including
modification of non-compliant properties), costs and attorneys fees. The Operating Partnership
believes it has a number of viable defenses, including that a majority of the named properties were
completed before the operative dates of the statutes in question and/or were not designed or built
by the Operating Partnership. Accordingly, the Operating Partnership is defending the suit
vigorously. Due to the pendency of the Operating Partnerships defenses and the uncertainty of many
other critical factual and legal issues, it is not possible to determine or predict the outcome of
the suit or a possible loss or a range of loss, and no amounts have been accrued at December 31,
2010. While no assurances can be given, the Operating Partnership does not believe that the suit,
if adversely determined, would have a material adverse effect on the Operating Partnership.
The Operating Partnership does not believe there is any other litigation pending or threatened
against it that, individually or in the aggregate, may reasonably be expected to have a material
adverse effect on the Operating Partnership.
The Operating Partnership has established a reserve and recorded a corresponding reduction to
its net gain on sales of discontinued operations related to potential liabilities associated with
its condominium conversion activities. The reserve covers potential product liability related to
each conversion. The Operating Partnership periodically assesses the adequacy of the reserve and
makes adjustments as necessary. During the year ended December 31, 2010, the Operating Partnership
recorded additional reserves of approximately $0.7 million, paid approximately $2.9 million in
claims, settlements and legal fees and released approximately $1.2 million of remaining reserves
for settled claims. As a result, the Operating Partnership had total reserves of approximately $3.3
million at December 31, 2010. While no assurances can be given, the Operating Partnership does not
believe that the ultimate resolution of these potential liabilities, if adversely determined, would
have a material adverse effect on the Operating Partnership.
As of December 31, 2010, the Operating Partnership has four projects totaling 717 apartment
units in various stages of development with estimated completion dates ranging through September
30, 2012, as well as other completed development projects that are in various stages of lease up or
are stabilized. Some of the projects are developed solely by the Operating Partnership, while
others were co-developed with various third party development partners. The development venture
agreements with partners are primarily deal-specific, with differing terms regarding
profit-sharing, equity contributions, returns on investment, buy-sell agreements and other
customary provisions. The partner is most often the general or managing partner of the
development venture. The typical buy-sell arrangements contain appraisal rights and provisions that
provide the right, but not the obligation, for the Operating Partnership to acquire the partners
interest in the project at fair market value upon the expiration of a negotiated time period (typically two to five
years after substantial completion of the project).
During the years ended December 31, 2010, 2009 and 2008, total operating lease payments
incurred for office
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space, including a portion of real estate taxes, insurance, repairs and
utilities, and including rent due under three ground leases, aggregated $7.6 million, $8.4 million
and $8.3 million, respectively.
The Company has entered into a retirement benefits agreement with its Chairman of the Board of
Trustees and deferred compensation agreements with its Vice Chairman and two former chief executive
officers. During the years ended December 31, 2010 and 2009, the Operating Partnership recognized
compensation expense of $0.9 million and $1.2 million, respectively, related to these agreements.
During the year ended December 31, 2008, the Operating Partnership reduced compensation expense by
$0.4 million related to these agreements.
The following table summarizes the Operating Partnerships contractual obligations for minimum
rent payments under operating leases and deferred compensation for the next five years and
thereafter as of December 31, 2010:
Payments Due by Year (in thousands) | ||||||||||||||||||||||||||||
2011 | 2012 | 2013 | 2014 | 2015 | Thereafter | Total | ||||||||||||||||||||||
Operating Leases: |
||||||||||||||||||||||||||||
Minimum Rent Payments (a)
|
$ | 5,478 | $ | 4,285 | $ | 4,431 | $ | 4,736 | $ | 4,729 | $ | 320,928 | $ | 344,587 | ||||||||||||||
Other Long-Term Liabilities: |
||||||||||||||||||||||||||||
Deferred Compensation (b)
|
1,457 | 1,770 | 1,485 | 1,677 | 1,677 | 9,182 | 17,248 |
(a) | Minimum basic rent due for various office space the Operating Partnership leases and fixed base rent due on ground leases for four properties/parcels. | |
(b) | Estimated payments to EQRs Chairman, Vice Chairman and two former CEOs based on planned retirement dates. |
19.
Reportable Segments
Operating segments are defined as components of an enterprise about which separate financial
information is available that is evaluated regularly by senior management. Senior management
decides how resources are allocated and assesses performance on a monthly basis.
The Operating Partnerships primary business is the acquisition, development and management of
multifamily residential properties, which includes the generation of rental and other related
income through the leasing of apartment units to residents. Senior management evaluates the
performance of each of our apartment communities individually and geographically, and both on a
same store and non-same store basis; however, each of our apartment communities generally has
similar economic characteristics, residents, products and services. The Operating Partnerships
operating segments have been aggregated by geography in a manner identical to that which is
provided to its chief operating decision maker.
The Operating Partnerships fee and asset management, development (including its partially
owned properties), condominium conversion and corporate housing (Equity Corporate Housing or ECH)
activities are immaterial and do not individually meet the threshold requirements of a reportable
segment and as such, have been aggregated in the Other segment in the tables presented below.
All revenues are from external customers and there is no customer who contributed 10% or more
of the Operating Partnerships total revenues during the three years ended December 31, 2010, 2009
or 2008.
The primary financial measure for the Operating Partnerships rental real estate segment is
net operating income (NOI), which represents rental income less: 1) property and maintenance
expense; 2) real estate taxes and insurance expense; and 3) property management expense (all as
reflected in the accompanying consolidated statements of operations). The Operating Partnership
believes that NOI is helpful to investors as a supplemental measure of its operating performance
because it is a direct measure of the actual operating results of the Operating Partnerships
apartment communities. Current year NOI is compared to prior year NOI and current year budgeted NOI
as a measure of financial performance. The following tables present NOI for each segment from our
rental real estate specific to continuing operations for the years ended December 31, 2010, 2009
and 2008, respectively, as well as total assets for the years ended December 31, 2010 and 2009,
respectively (amounts in thousands):
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Table of Contents
Year Ended December 31, 2010 | ||||||||||||||||||||||||
Northeast | Northwest | Southeast | Southwest | Other (3) | Total | |||||||||||||||||||
Rental income: |
||||||||||||||||||||||||
Same store (1) |
$ | 574,147 | $ | 353,123 | $ | 383,475 | $ | 417,523 | $ | | $ | 1,728,268 | ||||||||||||
Non-same store/other (2) (3) |
112,747 | 18,042 | 9,271 | 33,456 | 84,259 | 257,775 | ||||||||||||||||||
Total rental income |
686,894 | 371,165 | 392,746 | 450,979 | 84,259 | 1,986,043 | ||||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||
Same store (1) |
215,365 | 132,331 | 157,518 | 149,449 | | 654,663 | ||||||||||||||||||
Non-same store/other (2) (3) |
54,780 | 7,950 | 4,126 | 15,136 | 69,823 | 151,815 | ||||||||||||||||||
Total operating expenses |
270,145 | 140,281 | 161,644 | 164,585 | 69,823 | 806,478 | ||||||||||||||||||
NOI: |
||||||||||||||||||||||||
Same store (1) |
358,782 | 220,792 | 225,957 | 268,074 | | 1,073,605 | ||||||||||||||||||
Non-same store/other (2) (3) |
57,967 | 10,092 | 5,145 | 18,320 | 14,436 | 105,960 | ||||||||||||||||||
Total NOI |
$ | 416,749 | $ | 230,884 | $ | 231,102 | $ | 286,394 | $ | 14,436 | $ | 1,179,565 | ||||||||||||
Total assets |
$ | 6,211,534 | $ | 2,665,707 | $ | 2,602,318 | $ | 3,240,170 | $ | 1,464,465 | $ | 16,184,194 | ||||||||||||
(1) | Same store primarily includes all properties acquired or completed and stabilized prior to January 1, 2009, less properties subsequently sold, which represented 112,042 apartment units. | |
(2) | Non-same store primarily includes properties acquired after January 1, 2009, plus any properties in lease-up and not stabilized as of January 1, 2009. | |
(3) | Other includes ECH, development, condominium conversion overhead of $0.6 million and other corporate operations. Also reflects a $10.5 million elimination of rental income recorded in Northeast, Northwest, Southeast and Southwest operating segments related to ECH. |
Year Ended December 31, 2009 | ||||||||||||||||||||||||
Northeast | Northwest | Southeast | Southwest | Other (3) | Total | |||||||||||||||||||
Rental income: |
||||||||||||||||||||||||
Same store (1) |
$ | 566,518 | $ | 357,502 | $ | 383,239 | $ | 423,076 | $ | | $ | 1,730,335 | ||||||||||||
Non-same store/other (2) (3) |
23,195 | 2,010 | 4,268 | 16,985 | 69,364 | 115,822 | ||||||||||||||||||
Total rental income |
589,713 | 359,512 | 387,507 | 440,061 | 69,364 | 1,846,157 | ||||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||
Same store (1) |
211,352 | 129,696 | 158,977 | 148,483 | | 648,508 | ||||||||||||||||||
Non-same store/other (2) (3) |
12,798 | 1,851 | 1,727 | 9,418 | 68,692 | 94,486 | ||||||||||||||||||
Total operating expenses |
224,150 | 131,547 | 160,704 | 157,901 | 68,692 | 742,994 | ||||||||||||||||||
NOI: |
||||||||||||||||||||||||
Same store (1) |
355,166 | 227,806 | 224,262 | 274,593 | | 1,081,827 | ||||||||||||||||||
Non-same store/other (2) (3) |
10,397 | 159 | 2,541 | 7,567 | 672 | 21,336 | ||||||||||||||||||
Total NOI |
$ | 365,563 | $ | 227,965 | $ | 226,803 | $ | 282,160 | $ | 672 | $ | 1,103,163 | ||||||||||||
Total assets |
$ | 5,435,072 | $ | 2,474,775 | $ | 2,674,499 | $ | 2,971,396 | $ | 1,861,773 | $ | 15,417,515 | ||||||||||||
(1) | Same store primarily includes all properties acquired or completed and stabilized prior to January 1, 2009, less properties subsequently sold, which represented 112,042 apartment units. | |
(2) | Non-same store primarily includes properties acquired after January 1, 2009, plus any properties in lease-up and not stabilized as of January 1, 2009. | |
(3) | Other includes ECH, development, condominium conversion overhead of $1.4 million and other corporate operations. Also reflects a $9.6 million elimination of rental income recorded in Northeast, Northwest, Southeast and Southwest operating segments related to ECH. |
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Year Ended December 31, 2008 | ||||||||||||||||||||||||
Northeast | Northwest | Southeast | Southwest | Other (3) | Total | |||||||||||||||||||
Rental income: |
||||||||||||||||||||||||
Same store (1) |
$ | 553,712 | $ | 372,197 | $ | 407,871 | $ | 444,403 | $ | | $ | 1,778,183 | ||||||||||||
Non-same store/other (2) (3) |
37,000 | 18,347 | 6,090 | 23,400 | 101,934 | 186,771 | ||||||||||||||||||
Properties sold in 2010 (4) |
| | | | (88,681 | ) | (88,681 | ) | ||||||||||||||||
Total rental income |
590,712 | 390,544 | 413,961 | 467,803 | 13,253 | 1,876,273 | ||||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||
Same store (1) |
199,673 | 128,448 | 166,022 | 150,980 | | 645,123 | ||||||||||||||||||
Non-same store/other (2) (3) |
16,806 | 7,664 | 2,995 | 14,363 | 101,742 | 143,570 | ||||||||||||||||||
Properties sold in 2010 (4) |
| | | | (31,205 | ) | (31,205 | ) | ||||||||||||||||
Total operating expenses |
216,479 | 136,112 | 169,017 | 165,343 | 70,537 | 757,488 | ||||||||||||||||||
NOI: |
||||||||||||||||||||||||
Same store (1) |
354,039 | 243,749 | 241,849 | 293,423 | | 1,133,060 | ||||||||||||||||||
Non-same store/other (2) (3) |
20,194 | 10,683 | 3,095 | 9,037 | 192 | 43,201 | ||||||||||||||||||
Properties sold in 2010 (4) |
| | | | (57,476 | ) | (57,476 | ) | ||||||||||||||||
Total NOI |
$ | 374,233 | $ | 254,432 | $ | 244,944 | $ | 302,460 | $ | (57,284 | ) | $ | 1,118,785 | |||||||||||
(1) | Same store primarily includes all properties acquired or completed and stabilized prior to January 1, 2008, less properties subsequently sold, which represented 113,598 apartment units. | |
(2) | Non-same store primarily includes properties acquired after January 1, 2008, plus any properties in lease-up and not stabilized as of January 1, 2008. | |
(3) | Other includes ECH, development, condominium conversion overhead of $2.8 million and other corporate operations. Also reflects a $13.6 million elimination of rental income recorded in Northeast, Northwest, Southeast and Southwest operating segments related to ECH. | |
(4) | Reflects discontinued operations for properties sold during 2010. |
Note: Markets included in the above geographic segments are as follows:
(a) | Northeast New England (excluding Boston), Boston, New York Metro, DC Northern Virginia and Suburban Maryland. | |
(b) | Northwest Denver, Portland, San Francisco Bay Area and Seattle/Tacoma. | |
(c) | Southeast Atlanta, Jacksonville, Orlando, South Florida and Tampa. | |
(d) | Southwest Albuquerque, Inland Empire, Los Angeles, Orange County, Phoenix and San Diego. |
The following table presents a reconciliation of NOI from our rental real estate specific to
continuing operations for the years ended December 31, 2010, 2009 and 2008, respectively (amounts
in thousands):
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Rental income |
$ | 1,986,043 | $ | 1,846,157 | $ | 1,876,273 | ||||||
Property and maintenance expense |
(498,634 | ) | (464,809 | ) | (485,754 | ) | ||||||
Real estate taxes and insurance expense |
(226,718 | ) | (206,247 | ) | (194,671 | ) | ||||||
Property management expense |
(81,126 | ) | (71,938 | ) | (77,063 | ) | ||||||
Total operating expenses |
(806,478 | ) | (742,994 | ) | (757,488 | ) | ||||||
Net operating income |
$ | 1,179,565 | $ | 1,103,163 | $ | 1,118,785 | ||||||
20. Subsequent Events/Other
Subsequent Events | ||
Subsequent to December 31, 2010, the Operating Partnership: |
| Acquired two apartment properties consisting of 521 apartment units for $137.1 million; | ||
| Sold two consolidated apartment properties consisting of 600 apartment units for $32.7 million; | ||
| Repaid $173.0 million in mortgage loans; | ||
| Issued 3.0 million Common Shares at an average price of $50.84 per share for total consideration of $154.5 million under EQRs ATM share offering program; and | ||
| Increased its availability for issuance under EQRs ATM share offering program to 10,000,000 |
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Common Shares. |
Other
During the year ended December 31, 2010, the Operating Partnership recorded a $45.4 million
non-cash asset impairment charge on two parcels of land held for development as a result of changes
in the Operating Partnerships future plans for those parcels. The Operating Partnership now
intends to sell one parcel in the near term and contemplates a joint venture structure for the
other, necessitating this impairment charge. During the year ended December 31, 2009, the
Operating Partnership recorded an $11.1 million non-cash asset impairment charge on a parcel of
land held for development. During the year ended December 31, 2008, the Operating Partnership
recorded $116.4 million of non-cash asset impairment charges on land held for development related
to five potential development projects that will no longer be pursued. These charges were the
result of an analysis of each parcels estimated fair value (determined using internally developed
models that were based on market assumptions and comparable sales data) compared to its current
capitalized carrying value. The market assumptions used as inputs to the Operating Partnerships
fair value model include construction costs, leasing assumptions, growth rates, discount rates,
terminal capitalization rates and development yields, along with the Operating Partnerships
current plans for each individual asset. The Operating Partnership uses data on its existing
portfolio of properties and its recent acquisition and development properties, as well as similar
market data from third party sources, when available, in determining these inputs.
During the years ended December 31, 2010, 2009 and 2008, the Operating Partnership incurred
charges of $6.6 million, $1.7 million and $0.2 million, respectively, related to property
acquisition costs, such as survey, title and legal fees, on the acquisition of operating properties
and $5.3 million, $4.8 million and $5.6 million, respectively, related to the write-off of various
pursuit and out-of-pocket costs for terminated acquisition, disposition and development
transactions. These costs, totaling $11.9 million, $6.5 million and $5.8 million, respectively,
are included in other expenses in the accompanying consolidated statements of operations.
During the year ended December 31, 2008, the Operating Partnership recognized $0.7 million of
forfeited deposits for various terminated transactions, which are included in interest and other
income. During the year ended December 31, 2010, an arbitration panel awarded commissions,
interest and costs in the amount of $1.7 million to the listing and marketing agent related to 38
potential condo sales at one of the Operating Partnerships properties. In addition, during 2010,
2009 and 2008, the Operating Partnership received $5.2 million, $0.2 million and $1.7 million,
respectively, for the settlement of litigation/insurance claims, which are included in interest and
other income in the accompanying consolidated statements of operations.
On July 16, 2010, a portion of the parking garage collapsed at one of the Operating
Partnerships rental properties (Prospect Towers in Hackensack, New Jersey). The Operating
Partnership estimates that the costs related to such collapse (both expensed and capitalized),
including providing for residents interim needs, lost revenue and garage reconstruction, will be
approximately $12.0 million, after insurance reimbursements of $8.0 million. Costs to rebuild the
garage will be capitalized as incurred. Other costs, like those to accommodate displaced
residents, lost revenue due to a portion of the property being temporarily unavailable for
occupancy and legal costs, will reduce earnings as they are incurred. Generally, insurance
proceeds will be recorded as increases to earnings as they are received. An impairment charge of
$1.3 million was recognized to write-off the net book value of the collapsed garage. During the
year ended December 31, 2010, the Operating Partnership received approximately $4.0 million in
insurance proceeds which fully offset the impairment charge and partially offset expenses of $5.5
million that were recorded relating to this loss and are included in real estate taxes and
insurance on the consolidated statements of operations.
21. Quarterly Financial Data (Unaudited)
The following unaudited quarterly data has been prepared on the basis of a December 31
year-end. All amounts have also been restated in accordance with the guidance on discontinued
operations and reflect dispositions and/or properties held for sale through December 31, 2010.
Amounts are in thousands, except for per Unit amounts.
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Table of Contents
First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||
2010 | 3/31 | 6/30 | 9/30 | 12/31 | ||||||||||||
Total revenues (1) |
$ | 472,082 | $ | 494,541 | $ | 511,772 | $ | 517,124 | ||||||||
Operating income (1) |
112,382 | 115,247 | 121,047 | 93,325 | ||||||||||||
(Loss) income from continuing operations (1) |
(7,267 | ) | 4,714 | 14,930 | (32,221 | ) | ||||||||||
Discontinued operations, net (1) |
65,123 | 5,375 | 14,896 | 230,433 | ||||||||||||
Net income * |
57,856 | 10,089 | 29,826 | 198,212 | ||||||||||||
Net income available to Units |
54,486 | 6,656 | 26,397 | 194,802 | ||||||||||||
Earnings per Unit basic: |
||||||||||||||||
Net income available to Units |
$ | 0.18 | $ | 0.02 | $ | 0.09 | $ | 0.65 | ||||||||
Weighted average Units outstanding |
294,450 | 295,898 | 296,348 | 299,363 | ||||||||||||
Earnings per Unit diluted: |
||||||||||||||||
Net income available to Units |
$ | 0.18 | $ | 0.02 | $ | 0.09 | $ | 0.65 | ||||||||
Weighted average Units outstanding |
294,450 | 299,642 | 300,379 | 299,363 |
(1) | The amounts presented for the first three quarters of 2010 are not equal to the same amounts previously reported in the respective Form 10-Qs filed with the SEC for each period as a result of changes in discontinued operations due to additional property sales which occurred throughout 2010. Below is a reconciliation to the amounts previously reported: |
First | Second | Third | ||||||||||
Quarter | Quarter | Quarter | ||||||||||
2010 | 3/31 | 6/30 | 9/30 | |||||||||
Total revenues previously reported in Form 10-Q |
$ | 488,690 | $ | 510,937 | $ | 527,356 | ||||||
Total revenues subsequently reclassified to discontinued operations |
(16,608 | ) | (16,396 | ) | (15,584 | ) | ||||||
Total revenues disclosed in Form 10-K |
$ | 472,082 | $ | 494,541 | $ | 511,772 | ||||||
Operating income previously reported in Form 10-Q |
$ | 118,596 | $ | 121,529 | $ | 127,196 | ||||||
Operating income subsequently reclassified to discontinued operations |
(6,214 | ) | (6,282 | ) | (6,149 | ) | ||||||
Operating income disclosed in Form 10-K |
$ | 112,382 | $ | 115,247 | $ | 121,047 | ||||||
(Loss) income from continuing operations previously reported in Form 10-Q |
$ | (2,208 | ) | $ | 9,406 | $ | 19,884 | |||||
Income from continuing operations subsequently reclassified to
discontinued operations |
(5,059 | ) | (4,692 | ) | (4,954 | ) | ||||||
(Loss) income from continuing operations disclosed in Form 10-K |
$ | (7,267 | ) | $ | 4,714 | $ | 14,930 | |||||
Discontinued operations, net previously reported in Form 10-Q |
$ | 60,064 | $ | 683 | $ | 9,942 | ||||||
Discontinued operations, net from properties sold subsequent
to the respective reporting period |
5,059 | 4,692 | 4,954 | |||||||||
Discontinued operations, net disclosed in Form 10-K |
$ | 65,123 | $ | 5,375 | $ | 14,896 | ||||||
First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||
2009 | 3/31 | 6/30 | 9/30 | 12/31 | ||||||||||||
Total revenues (2) |
$ | 466,177 | $ | 464,225 | $ | 464,827 | $ | 461,274 | ||||||||
Operating income (2) |
126,283 | 120,661 | 122,703 | 126,954 | ||||||||||||
Income (loss) from continuing operations (2) |
7,858 | 7,813 | 4,256 | (16,996 | ) | |||||||||||
Discontinued operations, net (2) |
77,563 | 98,119 | 139,109 | 64,307 | ||||||||||||
Net income * |
85,421 | 105,932 | 143,365 | 47,311 | ||||||||||||
Net income available to Units |
81,866 | 102,314 | 140,061 | 43,858 | ||||||||||||
Earnings per Unit basic: |
||||||||||||||||
Net income available to Units |
$ | 0.28 | $ | 0.35 | $ | 0.48 | $ | 0.15 | ||||||||
Weighted average Units outstanding |
288,710 | 288,990 | 289,262 | 289,693 | ||||||||||||
Earnings per Unit diluted: |
||||||||||||||||
Net income available to Units |
$ | 0.28 | $ | 0.35 | $ | 0.48 | $ | 0.15 | ||||||||
Weighted average Units outstanding |
288,853 | 289,338 | 290,215 | 289,693 |
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(2) | The amounts presented for the four quarters of 2009 are not equal to the same amounts previously reported in either the Form 8-K filed with the SEC on September 14, 2010 (for the first, second and fourth quarters of 2009) or in the third quarter 2010 Form 10-Q filed with the SEC on November 4, 2010 (for the third quarter of 2009) primarily as a result of changes in discontinued operations due to additional property sales which occurred throughout 2010. Below is a reconciliation to the amounts previously reported: |
First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||
2009 | 3/31 | 6/30 | 9/30 | 12/31 | ||||||||||||
Total revenues previously reported in September 2010 Form 8-K/Form 10-Q |
$ | 482,475 | $ | 480,333 | $ | 480,241 | $ | 477,365 | ||||||||
Total revenues subsequently reclassified to discontinued operations |
(16,298 | ) | (16,108 | ) | (15,414 | ) | (16,091 | ) | ||||||||
Total revenues disclosed in Form 10-K |
$ | 466,177 | $ | 464,225 | $ | 464,827 | $ | 461,274 | ||||||||
Operating income previously reported in September 2010 Form 8-K/Form 10-Q |
$ | 132,245 | $ | 126,944 | $ | 128,655 | $ | 133,239 | ||||||||
Operating income subsequently reclassified to discontinued operations |
(5,962 | ) | (6,283 | ) | (5,952 | ) | (6,285 | ) | ||||||||
Operating income disclosed in Form 10-K |
$ | 126,283 | $ | 120,661 | $ | 122,703 | $ | 126,954 | ||||||||
Income (loss) from continuing operations previously reported in
September 2010 Form 8-K/Form 10-Q |
$ | 11,948 | $ | 12,339 | $ | 9,029 | $ | (13,146 | ) | |||||||
Income from continuing operations subsequently reclassified to
discontinued operations |
(4,090 | ) | (4,526 | ) | (4,773 | ) | (3,850 | ) | ||||||||
Income (loss) from continuing operations disclosed in Form 10-K |
$ | 7,858 | $ | 7,813 | $ | 4,256 | $ | (16,996 | ) | |||||||
Discontinued operations, net previously reported in September 2010 Form
8-K/Form 10-Q |
$ | 73,473 | $ | 93,593 | $ | 134,336 | $ | 60,457 | ||||||||
Discontinued operations, net from properties sold subsequent
to the respective reporting period |
4,090 | 4,526 | 4,773 | 3,850 | ||||||||||||
Discontinued operations, net disclosed in Form 10-K |
$ | 77,563 | $ | 98,119 | $ | 139,109 | $ | 64,307 | ||||||||
* | The Operating Partnership did not have any extraordinary items or cumulative effect of change in accounting principle during the years ended December 31, 2010 and 2009. Therefore, income before extraordinary items and cumulative effect of change in accounting principle is not shown as it was equal to the net income amounts disclosed above. |
F-46
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ERP OPERATING LIMITED PARTNERSHIP
Schedule III Real Estate and Accumulated Depreciation
Overall Summary
December 31, 2010
December 31, 2010
Investment in Real | Accumulated | Investment in Real | ||||||||||||||||||||||
Properties (H) | Units (H) | Estate, Gross | Depreciation | Estate, Net | Encumbrances | |||||||||||||||||||
Wholly Owned Unencumbered |
288 | 80,239 | $ | 12,555,402,637 | $ | (2,847,912,228 | ) | $ | 9,707,490,409 | $ | | |||||||||||||
Wholly Owned Encumbered |
137 | 39,395 | 6,016,421,350 | (1,346,626,508 | ) | 4,669,794,842 | 2,595,245,052 | |||||||||||||||||
Portfolio/Entity Encumbrances (1) |
| | | | | 1,417,683,780 | ||||||||||||||||||
Wholly Owned Properties |
425 | 119,634 | 18,571,823,987 | (4,194,538,736 | ) | 14,377,285,251 | 4,012,928,832 | |||||||||||||||||
Partially Owned Unencumbered |
| | 25,130,204 | | 25,130,204 | | ||||||||||||||||||
Partially Owned Encumbered |
24 | 5,232 | 1,105,416,801 | (142,817,905 | ) | 962,598,896 | 749,967,053 | |||||||||||||||||
Partially Owned Properties |
24 | 5,232 | 1,130,547,005 | (142,817,905 | ) | 987,729,100 | 749,967,053 | |||||||||||||||||
Total Unencumbered Properties |
288 | 80,239 | 12,580,532,841 | (2,847,912,228 | ) | 9,732,620,613 | | |||||||||||||||||
Total Encumbered Properties |
161 | 44,627 | 7,121,838,151 | (1,489,444,413 | ) | 5,632,393,738 | 4,762,895,885 | |||||||||||||||||
Total Consolidated Investment in Real Estate |
449 | 124,866 | $ | 19,702,370,992 | $ | (4,337,356,641 | ) | $ | 15,365,014,351 | $ | 4,762,895,885 | |||||||||||||
(1) | See attached Encumbrances Reconciliation. |
S-1
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ERP OPERATING LIMITED PARTNERSHIP
Schedule III Real Estate and Accumulated Depreciation
Encumbrances Reconciliation
December 31, 2010
Schedule III Real Estate and Accumulated Depreciation
Encumbrances Reconciliation
December 31, 2010
Number of | ||||||||||||
Properties | See Properties | |||||||||||
Portfolio/Entity Encumbrances | Encumbered by | With Note: | Amount | |||||||||
EQR-Bond Partnership |
6 | I | $ | 51,670,000 | ||||||||
EQR-Fanwell 2007 LP |
7 | J | 223,138,000 | |||||||||
EQR-Wellfan 2008 LP (R) |
15 | K | 550,000,000 | |||||||||
EQR-SOMBRA 2008 LP |
18 | L | 543,000,000 | (1) | ||||||||
Other |
| | 49,875,780 | (1) | ||||||||
Portfolio/Entity Encumbrances |
46 | 1,417,683,780 | ||||||||||
Individual Property Encumbrances |
3,345,212,105 | |||||||||||
Total Encumbrances per
Financial Statements |
$ | 4,762,895,885 | ||||||||||
(1) | Temporary letters of credit supported by the Operating Partnerships revolving credit facility and/or a temporary guaranty from the Operating Partnership were posted as collateral in place of sold properties. Property substitutions closed in January 2011 and the letters of credit and guaranty were terminated. |
S-2
Table of Contents
ERP OPERATING LIMITED PARTNERSHIP
Schedule III Real Estate and Accumulated Depreciation
(Amounts in thousands)
Schedule III Real Estate and Accumulated Depreciation
(Amounts in thousands)
The changes in total real estate for the years ended December 31, 2010, 2009 and 2008 are as
follows:
2010 | 2009 | 2008 | ||||||||||
Balance, beginning of year |
$ | 18,465,144 | $ | 18,690,239 | $ | 18,333,350 | ||||||
Acquisitions and development |
1,789,948 | 512,977 | 995,026 | |||||||||
Improvements |
141,199 | 125,965 | 172,165 | |||||||||
Dispositions and other |
(693,920 | ) | (864,037 | ) | (810,302 | ) | ||||||
Balance, end of year |
$ | 19,702,371 | $ | 18,465,144 | $ | 18,690,239 | ||||||
The changes in accumulated depreciation for the years ended December 31, 2010, 2009 and 2008 are as
follows:
2010 | 2009 | 2008 | ||||||||||
Balance, beginning of year |
$ | 3,877,564 | $ | 3,561,300 | $ | 3,170,125 | ||||||
Depreciation |
673,403 | 600,375 | 602,908 | |||||||||
Dispositions and other |
(213,610 | ) | (284,111 | ) | (211,733 | ) | ||||||
Balance, end of year |
$ | 4,337,357 | $ | 3,877,564 | $ | 3,561,300 | ||||||
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ERP OPERATING LIMITED PARTNERSHIP
Schedule III Real Estate and Accumulated Depreciation
December 31, 2010
Schedule III Real Estate and Accumulated Depreciation
December 31, 2010
Cost Capitalized | ||||||||||||||||||||||||||||||||||||||||||||||||
Subsequent to | Gross Amount Carried | |||||||||||||||||||||||||||||||||||||||||||||||
Initial Cost to | Acquisition | at Close of | ||||||||||||||||||||||||||||||||||||||||||||||
Description | Company | (Improvements, net) (E) | Period 12/31/10 | |||||||||||||||||||||||||||||||||||||||||||||
Date of | Building & | Building & | Building & | Accumulated | Investment in Real | |||||||||||||||||||||||||||||||||||||||||||
Apartment Name | Location | Construction | Units (H) | Land | Fixtures | Land | Fixtures | Land | Fixtures (A) | Total (B) | Depreciation (C) | Estate, Net at 12/31/10 (B) | Encumbrances | |||||||||||||||||||||||||||||||||||
ERPOP Wholly Owned Unencumbered: |
||||||||||||||||||||||||||||||||||||||||||||||||
500 West 23rd Street (fka 10 Chelsea) |
New York, NY | (F) | | $ | | $ | 27,382,360 | $ | | $ | | $ | | $ | 27,382,360 | $ | 27,382,360 | $ | | $ | 27,382,360 | $ | | |||||||||||||||||||||||||
1210 Mass |
Washington, D.C. (G) | 2004 | 144 | 9,213,512 | 36,559,189 | | 285,543 | 9,213,512 | 36,844,732 | 46,058,244 | (7,702,999 | ) | 38,355,245 | | ||||||||||||||||||||||||||||||||||
1401 Joyce on Pentagon Row |
Arlington, VA | 2004 | 326 | 9,780,000 | 89,680,000 | | 163,567 | 9,780,000 | 89,843,567 | 99,623,567 | (7,954,463 | ) | 91,669,104 | | ||||||||||||||||||||||||||||||||||
1660 Peachtree |
Atlanta, GA | 1999 | 355 | 7,924,126 | 23,602,563 | | 2,032,029 | 7,924,126 | 25,634,592 | 33,558,718 | (7,213,204 | ) | 26,345,514 | | ||||||||||||||||||||||||||||||||||
2201 Pershing Drive |
Arlington, VA | (F) | | 12,054,081 | 2,652,636 | | | 12,054,081 | 2,652,636 | 14,706,717 | | 14,706,717 | | |||||||||||||||||||||||||||||||||||
2400 M St |
Washington, D.C. (G) | 2006 | 359 | 30,006,593 | 114,013,785 | | 732,059 | 30,006,593 | 114,745,844 | 144,752,437 | (21,822,792 | ) | 122,929,645 | | ||||||||||||||||||||||||||||||||||
420 East 80th Street |
New York, NY | 1961 | 155 | 39,277,000 | 23,026,984 | | 2,501,381 | 39,277,000 | 25,528,365 | 64,805,365 | (5,980,711 | ) | 58,824,654 | | ||||||||||||||||||||||||||||||||||
425 Mass |
Washington, D.C. (G) | 2009 | 559 | 28,150,000 | 138,600,000 | | 1,953,014 | 28,150,000 | 140,553,014 | 168,703,014 | (4,494,218 | ) | 164,208,796 | | ||||||||||||||||||||||||||||||||||
600 Washington |
New York, NY (G) | 2004 | 135 | 32,852,000 | 43,140,551 | | 195,058 | 32,852,000 | 43,335,609 | 76,187,609 | (9,485,348 | ) | 66,702,261 | | ||||||||||||||||||||||||||||||||||
70 Greene |
Jersey City, NJ (G) | 2010 | 480 | 28,170,659 | 239,232,094 | | 103,450 | 28,170,659 | 239,335,544 | 267,506,203 | (6,599,249 | ) | 260,906,954 | | ||||||||||||||||||||||||||||||||||
71 Broadway |
New York, NY (G) | 1997 | 238 | 22,611,600 | 77,492,171 | | 2,960,860 | 22,611,600 | 80,453,031 | 103,064,631 | (17,989,358 | ) | 85,075,273 | | ||||||||||||||||||||||||||||||||||
777 Sixth |
New York, NY (G) | 2002 | 294 | 65,352,706 | 65,747,294 | | 282,143 | 65,352,706 | 66,029,437 | 131,382,143 | (8,432,644 | ) | 122,949,499 | | ||||||||||||||||||||||||||||||||||
Abington Glen |
Abington, MA | 1968 | 90 | 553,105 | 3,697,396 | | 2,359,072 | 553,105 | 6,056,468 | 6,609,573 | (2,794,784 | ) | 3,814,789 | | ||||||||||||||||||||||||||||||||||
Acacia Creek |
Scottsdale, AZ | 1988-1994 | 304 | 3,663,473 | 21,172,386 | | 2,814,423 | 3,663,473 | 23,986,809 | 27,650,282 | (11,190,829 | ) | 16,459,453 | | ||||||||||||||||||||||||||||||||||
Arden Villas |
Orlando, FL | 1999 | 336 | 5,500,000 | 28,600,796 | | 3,182,624 | 5,500,000 | 31,783,420 | 37,283,420 | (8,171,582 | ) | 29,111,838 | | ||||||||||||||||||||||||||||||||||
Arlington at Perimeter Center |
Atlanta, GA | 1980 | 204 | 2,448,000 | 8,099,110 | | 114,675 | 2,448,000 | 8,213,785 | 10,661,785 | (1,300,791 | ) | 9,360,994 | | ||||||||||||||||||||||||||||||||||
Ashton, The |
Corona Hills, CA | 1986 | 492 | 2,594,264 | 33,042,398 | | 5,966,954 | 2,594,264 | 39,009,352 | 41,603,616 | (18,806,334 | ) | 22,797,282 | | ||||||||||||||||||||||||||||||||||
Audubon Village |
Tampa, FL | 1990 | 447 | 3,576,000 | 26,121,909 | | 4,114,611 | 3,576,000 | 30,236,520 | 33,812,520 | (13,268,213 | ) | 20,544,307 | | ||||||||||||||||||||||||||||||||||
Auvers Village |
Orlando, FL | 1991 | 480 | 3,808,823 | 29,322,243 | | 6,216,049 | 3,808,823 | 35,538,292 | 39,347,115 | (15,974,356 | ) | 23,372,759 | | ||||||||||||||||||||||||||||||||||
Avenue Royale |
Jacksonville, FL | 2001 | 200 | 5,000,000 | 17,785,388 | | 917,456 | 5,000,000 | 18,702,844 | 23,702,844 | (4,583,891 | ) | 19,118,953 | | ||||||||||||||||||||||||||||||||||
Avon Place, LLC |
Avon, CT | 1973 | 163 | 1,788,943 | 12,440,003 | | 1,531,391 | 1,788,943 | 13,971,394 | 15,760,337 | (4,990,349 | ) | 10,769,988 | | ||||||||||||||||||||||||||||||||||
Ball Park Lofts |
Denver, CO (G) | 2003 | 343 | 5,481,556 | 51,658,740 | | 2,708,015 | 5,481,556 | 54,366,755 | 59,848,311 | (12,931,360 | ) | 46,916,951 | | ||||||||||||||||||||||||||||||||||
Barrington Place |
Oviedo, FL | 1998 | 233 | 6,990,000 | 15,740,825 | | 2,533,678 | 6,990,000 | 18,274,503 | 25,264,503 | (6,000,104 | ) | 19,264,399 | | ||||||||||||||||||||||||||||||||||
Bay Hill |
Long Beach, CA | 2002 | 160 | 7,600,000 | 27,437,239 | | 740,325 | 7,600,000 | 28,177,564 | 35,777,564 | (7,029,980 | ) | 28,747,584 | | ||||||||||||||||||||||||||||||||||
Bella Terra I |
Mukilteo, WA (G) | 2002 | 235 | 5,686,861 | 26,070,540 | | 667,419 | 5,686,861 | 26,737,959 | 32,424,820 | (7,277,028 | ) | 25,147,792 | | ||||||||||||||||||||||||||||||||||
Bella Vista |
Phoenix, AZ | 1995 | 248 | 2,978,879 | 20,641,333 | | 3,393,449 | 2,978,879 | 24,034,782 | 27,013,661 | (11,641,771 | ) | 15,371,890 | | ||||||||||||||||||||||||||||||||||
Bella Vista I, II, III Combined |
Woodland Hills, CA | 2003-2007 | 579 | 31,682,754 | 121,095,785 | | 1,390,256 | 31,682,754 | 122,486,041 | 154,168,795 | (23,933,139 | ) | 130,235,656 | | ||||||||||||||||||||||||||||||||||
Belle Arts Condominium Homes, LLC |
Bellevue, WA | 2000 | 1 | 63,158 | 248,929 | | (5,320 | ) | 63,158 | 243,609 | 306,767 | | 306,767 | | ||||||||||||||||||||||||||||||||||
Beneva Place |
Sarasota, FL | 1986 | 192 | 1,344,000 | 9,665,447 | | 1,728,604 | 1,344,000 | 11,394,051 | 12,738,051 | (5,284,608 | ) | 7,453,443 | | ||||||||||||||||||||||||||||||||||
Berkeley Land |
Berkeley, CA | (F) | | 13,908,910 | 801,101 | | | 13,908,910 | 801,101 | 14,710,011 | | 14,710,011 | | |||||||||||||||||||||||||||||||||||
Bermuda Cove |
Jacksonville, FL | 1989 | 350 | 1,503,000 | 19,561,896 | | 4,556,127 | 1,503,000 | 24,118,023 | 25,621,023 | (11,324,915 | ) | 14,296,108 | | ||||||||||||||||||||||||||||||||||
Bishop Park |
Winter Park, FL | 1991 | 324 | 2,592,000 | 17,990,436 | | 3,646,274 | 2,592,000 | 21,636,710 | 24,228,710 | (10,340,427 | ) | 13,888,283 | | ||||||||||||||||||||||||||||||||||
Bradford Apartments |
Newington, CT | 1964 | 64 | 401,091 | 2,681,210 | | 579,531 | 401,091 | 3,260,741 | 3,661,832 | (1,301,744 | ) | 2,360,088 | | ||||||||||||||||||||||||||||||||||
Briar Knoll Apts |
Vernon, CT | 1986 | 150 | 928,972 | 6,209,988 | | 1,274,495 | 928,972 | 7,484,483 | 8,413,455 | (3,030,004 | ) | 5,383,451 | | ||||||||||||||||||||||||||||||||||
Bridford Lakes II |
Greensboro, NC | (F) | | 1,100,564 | 792,509 | | | 1,100,564 | 792,509 | 1,893,073 | | 1,893,073 | | |||||||||||||||||||||||||||||||||||
Bridgewater at Wells Crossing |
Orange Park, FL | 1986 | 288 | 2,160,000 | 13,347,549 | | 2,010,434 | 2,160,000 | 15,357,983 | 17,517,983 | (6,560,719 | ) | 10,957,264 | | ||||||||||||||||||||||||||||||||||
Brookside (MD) |
Frederick, MD | 1993 | 228 | 2,736,000 | 7,934,069 | | 2,157,009 | 2,736,000 | 10,091,078 | 12,827,078 | (4,847,243 | ) | 7,979,835 | | ||||||||||||||||||||||||||||||||||
Brookside II (MD) |
Frederick, MD | 1979 | 204 | 2,450,800 | 6,913,202 | | 2,622,214 | 2,450,800 | 9,535,416 | 11,986,216 | (4,965,160 | ) | 7,021,056 | | ||||||||||||||||||||||||||||||||||
Camellero |
Scottsdale, AZ | 1979 | 348 | 1,924,900 | 17,324,593 | | 5,445,971 | 1,924,900 | 22,770,564 | 24,695,464 | (13,879,083 | ) | 10,816,381 | | ||||||||||||||||||||||||||||||||||
Carlyle Mill |
Alexandria, VA | 2002 | 317 | 10,000,000 | 51,367,913 | | 3,585,927 | 10,000,000 | 54,953,840 | 64,953,840 | (15,384,028 | ) | 49,569,812 | | ||||||||||||||||||||||||||||||||||
Center Pointe |
Beaverton, OR | 1996 | 264 | 3,421,535 | 15,708,853 | | 2,605,275 | 3,421,535 | 18,314,128 | 21,735,663 | (7,023,656 | ) | 14,712,007 | | ||||||||||||||||||||||||||||||||||
Centre Club |
Ontario, CA | 1994 | 312 | 5,616,000 | 23,485,891 | | 2,576,818 | 5,616,000 | 26,062,709 | 31,678,709 | (9,857,007 | ) | 21,821,702 | | ||||||||||||||||||||||||||||||||||
Centre Club II |
Ontario, CA | 2002 | 100 | 1,820,000 | 9,528,898 | | 539,590 | 1,820,000 | 10,068,488 | 11,888,488 | (3,186,170 | ) | 8,702,318 | | ||||||||||||||||||||||||||||||||||
Chandler Court |
Chandler, AZ | 1987 | 316 | 1,353,100 | 12,175,173 | | 4,308,670 | 1,353,100 | 16,483,843 | 17,836,943 | (9,303,425 | ) | 8,533,518 | | ||||||||||||||||||||||||||||||||||
Chandlers Bay |
Kent, WA | 1989 | 293 | 3,700,000 | 18,962,585 | | 69,473 | 3,700,000 | 19,032,058 | 22,732,058 | (2,175,442 | ) | 20,556,616 | | ||||||||||||||||||||||||||||||||||
Chatelaine Park |
Duluth, GA | 1995 | 303 | 1,818,000 | 24,489,671 | | 1,974,089 | 1,818,000 | 26,463,760 | 28,281,760 | (11,447,801 | ) | 16,833,959 | | ||||||||||||||||||||||||||||||||||
Chesapeake Glen Apts (fka Greentree I, II & III) |
Glen Burnie, MD | 1973 | 796 | 8,993,411 | 27,301,052 | | 20,936,090 | 8,993,411 | 48,237,142 | 57,230,553 | (22,479,872 | ) | 34,750,681 | | ||||||||||||||||||||||||||||||||||
Chestnut Hills |
Puyallup, WA | 1991 | 157 | 756,300 | 6,806,635 | | 1,360,272 | 756,300 | 8,166,907 | 8,923,207 | (4,244,605 | ) | 4,678,602 | | ||||||||||||||||||||||||||||||||||
Chickasaw Crossing |
Orlando, FL | 1986 | 292 | 2,044,000 | 12,366,832 | | 1,786,050 | 2,044,000 | 14,152,882 | 16,196,882 | (6,515,656 | ) | 9,681,226 | | ||||||||||||||||||||||||||||||||||
Chinatown Gateway |
Los Angeles, CA | (F) | | 14,791,831 | 11,026,473 | | | 14,791,831 | 11,026,473 | 25,818,304 | | 25,818,304 | | |||||||||||||||||||||||||||||||||||
Citrus Falls |
Tampa, FL | 2003 | 273 | 8,190,000 | 28,894,280 | | 381,158 | 8,190,000 | 29,275,438 | 37,465,438 | (5,939,746 | ) | 31,525,692 | | ||||||||||||||||||||||||||||||||||
City View (GA) |
Atlanta, GA (G) | 2003 | 202 | 6,440,800 | 19,993,460 | | 1,256,448 | 6,440,800 | 21,249,908 | 27,690,708 | (5,161,465 | ) | 22,529,243 | | ||||||||||||||||||||||||||||||||||
Clarys Crossing |
Columbia, MD | 1984 | 198 | 891,000 | 15,489,721 | | 1,986,718 | 891,000 | 17,476,439 | 18,367,439 | (8,016,743 | ) | 10,350,696 | | ||||||||||||||||||||||||||||||||||
Cleo, The |
Los Angeles, CA | 1989 | 92 | 6,615,467 | 14,829,335 | | 3,663,066 | 6,615,467 | 18,492,401 | 25,107,868 | (3,530,065 | ) | 21,577,803 | | ||||||||||||||||||||||||||||||||||
Club at Tanasbourne |
Hillsboro, OR | 1990 | 352 | 3,521,300 | 16,257,934 | | 3,046,161 | 3,521,300 | 19,304,095 | 22,825,395 | (9,895,369 | ) | 12,930,026 | | ||||||||||||||||||||||||||||||||||
Club at the Green |
Beaverton, OR | 1991 | 254 | 2,030,950 | 12,616,747 | | 2,526,289 | 2,030,950 | 15,143,036 | 17,173,986 | (7,815,215 | ) | 9,358,771 | | ||||||||||||||||||||||||||||||||||
Coconut Palm Club |
Coconut Creek, GA | 1992 | 300 | 3,001,700 | 17,678,928 | | 2,525,679 | 3,001,700 | 20,204,607 | 23,206,307 | (9,321,082 | ) | 13,885,225 | | ||||||||||||||||||||||||||||||||||
Cortona at Dana Park |
Mesa, AZ | 1986 | 222 | 2,028,939 | 12,466,128 | | 2,413,182 | 2,028,939 | 14,879,310 | 16,908,249 | (7,286,220 | ) | 9,622,029 | | ||||||||||||||||||||||||||||||||||
Country Gables |
Beaverton, OR | 1991 | 288 | 1,580,500 | 14,215,444 | | 3,412,313 | 1,580,500 | 17,627,757 | 19,208,257 | (9,537,809 | ) | 9,670,448 | | ||||||||||||||||||||||||||||||||||
Cove at Boynton Beach I |
Boynton Beach, FL | 1996 | 252 | 12,600,000 | 31,469,651 | | 2,779,931 | 12,600,000 | 34,249,582 | 46,849,582 | (9,526,032 | ) | 37,323,550 | | ||||||||||||||||||||||||||||||||||
Cove at Boynton Beach II |
Boynton Beach, FL | 1998 | 296 | 14,800,000 | 37,874,719 | | | 14,800,000 | 37,874,719 | 52,674,719 | (10,138,327 | ) | 42,536,392 | | ||||||||||||||||||||||||||||||||||
Cove at Fishers Landing |
Vancouver, WA | 1993 | 253 | 2,277,000 | 15,656,887 | | 1,152,551 | 2,277,000 | 16,809,438 | 19,086,438 | (5,710,162 | ) | 13,376,276 | | ||||||||||||||||||||||||||||||||||
Creekside Village |
Mountlake Terrace, WA | 1987 | 512 | 2,807,600 | 25,270,594 | | 4,629,268 | 2,807,600 | 29,899,862 | 32,707,462 | (17,364,294 | ) | 15,343,168 | | ||||||||||||||||||||||||||||||||||
Crosswinds |
St. Petersburg, FL | 1986 | 208 | 1,561,200 | 5,756,822 | | 2,155,601 | 1,561,200 | 7,912,423 | 9,473,623 | (4,270,769 | ) | 5,202,854 | | ||||||||||||||||||||||||||||||||||
Crown Court |
Scottsdale, AZ | 1987 | 416 | 3,156,600 | 28,414,599 | | 7,093,468 | 3,156,600 | 35,508,067 | 38,664,667 | (17,536,796 | ) | 21,127,871 | | ||||||||||||||||||||||||||||||||||
Crowntree Lakes |
Orlando, FL | 2008 | 352 | 12,009,630 | 44,407,977 | | 128,840 | 12,009,630 | 44,536,817 | 56,546,447 | (5,032,304 | ) | 51,514,143 | | ||||||||||||||||||||||||||||||||||
Cypress Lake at Waterford |
Orlando, FL | 2001 | 316 | 7,000,000 | 27,654,816 | | 1,474,998 | 7,000,000 | 29,129,814 | 36,129,814 | (7,889,517 | ) | 28,240,297 | | ||||||||||||||||||||||||||||||||||
Dartmouth Woods |
Lakewood, CO | 1990 | 201 | 1,609,800 | 10,832,754 | | 1,964,282 | 1,609,800 | 12,797,036 | 14,406,836 | (6,455,552 | ) | 7,951,284 | | ||||||||||||||||||||||||||||||||||
Dean Estates |
Taunton, MA | 1984 | 58 | 498,080 | 3,329,560 | | 622,827 | 498,080 | 3,952,387 | 4,450,467 | (1,678,930 | ) | 2,771,537 | | ||||||||||||||||||||||||||||||||||
Deerwood (Corona) |
Corona, CA | 1992 | 316 | 4,742,200 | 20,272,892 | | 3,818,931 | 4,742,200 | 24,091,823 | 28,834,023 | (11,726,867 | ) | 17,107,156 | | ||||||||||||||||||||||||||||||||||
Defoor Village |
Atlanta, GA | 1997 | 156 | 2,966,400 | 10,570,210 | | 1,990,444 | 2,966,400 | 12,560,654 | 15,527,054 | (5,858,484 | ) | 9,668,570 | |
S-4
Table of Contents
ERP OPERATING LIMITED PARTNERSHIP
Schedule III Real Estate and Accumulated Depreciation
December 31, 2010
Schedule III Real Estate and Accumulated Depreciation
December 31, 2010
Cost Capitalized | ||||||||||||||||||||||||||||||||||||||||||||||||
Subsequent to | Gross Amount Carried | |||||||||||||||||||||||||||||||||||||||||||||||
Initial Cost to | Acquisition | at Close of | ||||||||||||||||||||||||||||||||||||||||||||||
Description | Company | (Improvements, net) (E) | Period 12/31/10 | |||||||||||||||||||||||||||||||||||||||||||||
Date of | Building & | Building & | Building & | Accumulated | Investment in Real | |||||||||||||||||||||||||||||||||||||||||||
Apartment Name | Location | Construction | Units (H) | Land | Fixtures | Land | Fixtures | Land | Fixtures (A) | Total (B) | Depreciation (C) | Estate, Net at 12/31/10 (B) | Encumbrances | |||||||||||||||||||||||||||||||||||
Del Mar Ridge |
San Diego, CA | 1998 | 181 | 7,801,824 | 36,948,176 | | 2,298,593 | 7,801,824 | 39,246,769 | 47,048,593 | (3,116,754 | ) | 43,931,839 | | ||||||||||||||||||||||||||||||||||
Desert Homes |
Phoenix, AZ | 1982 | 412 | 1,481,050 | 13,390,249 | | 4,652,484 | 1,481,050 | 18,042,733 | 19,523,783 | (10,220,322 | ) | 9,303,461 | | ||||||||||||||||||||||||||||||||||
Eagle Canyon |
Chino Hills, CA | 1985 | 252 | 1,808,900 | 16,274,361 | | 4,994,045 | 1,808,900 | 21,268,406 | 23,077,306 | (10,622,403 | ) | 12,454,903 | | ||||||||||||||||||||||||||||||||||
Ellipse at Government Center |
Fairfax, VA | 1989 | 404 | 19,433,000 | 56,816,266 | | 2,245,450 | 19,433,000 | 59,061,716 | 78,494,716 | (7,973,317 | ) | 70,521,399 | | ||||||||||||||||||||||||||||||||||
Emerson Place |
Boston, MA (G) | 1962 | 444 | 14,855,000 | 57,566,636 | | 15,120,573 | 14,855,000 | 72,687,209 | 87,542,209 | (36,608,983 | ) | 50,933,226 | | ||||||||||||||||||||||||||||||||||
Enclave at Lake Underhill |
Orlando, FL | 1989 | 312 | 9,359,750 | 29,539,650 | | 1,690,403 | 9,359,750 | 31,230,053 | 40,589,803 | (7,327,341 | ) | 33,262,462 | | ||||||||||||||||||||||||||||||||||
Enclave at Waterways |
Deerfield Beach, FL | 1998 | 300 | 15,000,000 | 33,194,576 | | 843,037 | 15,000,000 | 34,037,613 | 49,037,613 | (8,268,775 | ) | 40,768,838 | | ||||||||||||||||||||||||||||||||||
Enclave at Winston Park |
Coconut Creek, FL | 1995 | 278 | 5,560,000 | 19,939,324 | | 2,101,199 | 5,560,000 | 22,040,523 | 27,600,523 | (7,511,989 | ) | 20,088,534 | | ||||||||||||||||||||||||||||||||||
Enclave, The |
Tempe, AZ | 1994 | 204 | 1,500,192 | 19,281,399 | | 1,333,483 | 1,500,192 | 20,614,882 | 22,115,074 | (9,498,305 | ) | 12,616,769 | | ||||||||||||||||||||||||||||||||||
Estates at Phipps |
Atlanta, GA | 1996 | 234 | 9,360,000 | 29,705,236 | | 3,780,696 | 9,360,000 | 33,485,932 | 42,845,932 | (9,625,684 | ) | 33,220,248 | | ||||||||||||||||||||||||||||||||||
Estates at Wellington Green |
Wellington, FL | 2003 | 400 | 20,000,000 | 64,790,850 | | 1,719,926 | 20,000,000 | 66,510,776 | 86,510,776 | (15,486,015 | ) | 71,024,761 | | ||||||||||||||||||||||||||||||||||
Fairland Gardens |
Silver Spring, MD | 1981 | 400 | 6,000,000 | 19,972,183 | | 5,994,235 | 6,000,000 | 25,966,418 | 31,966,418 | (12,839,143 | ) | 19,127,275 | | ||||||||||||||||||||||||||||||||||
Four Winds |
Fall River, MA | 1987 | 168 | 1,370,843 | 9,163,804 | | 1,961,290 | 1,370,843 | 11,125,094 | 12,495,937 | (4,317,329 | ) | 8,178,608 | | ||||||||||||||||||||||||||||||||||
Fox Hill Apartments |
Enfield, CT | 1974 | 168 | 1,129,018 | 7,547,256 | | 1,410,030 | 1,129,018 | 8,957,286 | 10,086,304 | (3,473,400 | ) | 6,612,904 | | ||||||||||||||||||||||||||||||||||
Fox Run (WA) |
Federal Way, WA | 1988 | 144 | 626,637 | 5,765,018 | | 1,644,476 | 626,637 | 7,409,494 | 8,036,131 | (4,492,269 | ) | 3,543,862 | | ||||||||||||||||||||||||||||||||||
Fox Run II (WA) |
Federal Way, WA | 1988 | 18 | 80,000 | 1,286,139 | | 53,086 | 80,000 | 1,339,225 | 1,419,225 | (389,957 | ) | 1,029,268 | | ||||||||||||||||||||||||||||||||||
Gables Grand Plaza |
Coral Gables, FL (G) | 1998 | 195 | | 44,601,000 | | 3,174,122 | | 47,775,122 | 47,775,122 | (12,598,590 | ) | 35,176,532 | | ||||||||||||||||||||||||||||||||||
Gallery, The |
Hermosa Beach, CA | 1971 | 168 | 18,144,000 | 46,567,941 | | 1,719,605 | 18,144,000 | 48,287,546 | 66,431,546 | (9,535,678 | ) | 56,895,868 | | ||||||||||||||||||||||||||||||||||
Gatehouse at Pine Lake |
Pembroke Pines, FL | 1990 | 296 | 1,896,600 | 17,070,795 | | 3,174,037 | 1,896,600 | 20,244,832 | 22,141,432 | (10,411,240 | ) | 11,730,192 | | ||||||||||||||||||||||||||||||||||
Gatehouse on the Green |
Plantation, FL | 1990 | 312 | 2,228,200 | 20,056,270 | | 6,485,962 | 2,228,200 | 26,542,232 | 28,770,432 | (12,580,475 | ) | 16,189,957 | | ||||||||||||||||||||||||||||||||||
Gates of Redmond |
Redmond, WA | 1979 | 180 | 2,306,100 | 12,064,015 | | 4,624,741 | 2,306,100 | 16,688,756 | 18,994,856 | (7,467,775 | ) | 11,527,081 | | ||||||||||||||||||||||||||||||||||
Gatewood |
Pleasanton, CA | 1985 | 200 | 6,796,511 | 20,249,392 | | 3,558,873 | 6,796,511 | 23,808,265 | 30,604,776 | (6,922,485 | ) | 23,682,291 | | ||||||||||||||||||||||||||||||||||
Governors Green |
Bowie, MD | 1999 | 478 | 19,845,000 | 73,335,916 | | 513,833 | 19,845,000 | 73,849,749 | 93,694,749 | (10,600,450 | ) | 83,094,299 | | ||||||||||||||||||||||||||||||||||
Greenfield Village |
Rocky Hill , CT | 1965 | 151 | 911,534 | 6,093,418 | | 623,523 | 911,534 | 6,716,941 | 7,628,475 | (2,669,219 | ) | 4,959,256 | | ||||||||||||||||||||||||||||||||||
Greenhouse Roswell |
Roswell, GA | 1985 | 236 | 1,220,000 | 10,974,727 | | 2,862,866 | 1,220,000 | 13,837,593 | 15,057,593 | (8,334,268 | ) | 6,723,325 | | ||||||||||||||||||||||||||||||||||
Hamilton Villas |
Beverly Hills, CA | 1990 | 35 | 7,772,000 | 16,864,269 | | 1,197,789 | 7,772,000 | 18,062,058 | 25,834,058 | (2,088,921 | ) | 23,745,137 | | ||||||||||||||||||||||||||||||||||
Hammocks Place |
Miami, FL | 1986 | 296 | 319,180 | 12,513,467 | | 3,361,988 | 319,180 | 15,875,455 | 16,194,635 | (9,682,288 | ) | 6,512,347 | | ||||||||||||||||||||||||||||||||||
Hampshire Place |
Los Angeles, CA | 1989 | 259 | 10,806,000 | 30,335,330 | | 1,855,750 | 10,806,000 | 32,191,080 | 42,997,080 | (8,142,603 | ) | 34,854,477 | | ||||||||||||||||||||||||||||||||||
Hamptons |
Puyallup, WA | 1991 | 230 | 1,119,200 | 10,075,844 | | 1,812,434 | 1,119,200 | 11,888,278 | 13,007,478 | (6,014,780 | ) | 6,992,698 | | ||||||||||||||||||||||||||||||||||
Heritage Ridge |
Lynwood, WA | 1999 | 197 | 6,895,000 | 18,983,597 | | 492,899 | 6,895,000 | 19,476,496 | 26,371,496 | (5,168,705 | ) | 21,202,791 | | ||||||||||||||||||||||||||||||||||
Heritage, The |
Phoenix, AZ | 1995 | 204 | 1,209,705 | 13,136,903 | | 1,360,019 | 1,209,705 | 14,496,922 | 15,706,627 | (6,803,317 | ) | 8,903,310 | | ||||||||||||||||||||||||||||||||||
Heron Pointe |
Boynton Beach, FL | 1989 | 192 | 1,546,700 | 7,774,676 | | 1,923,892 | 1,546,700 | 9,698,568 | 11,245,268 | (5,039,618 | ) | 6,205,650 | | ||||||||||||||||||||||||||||||||||
High Meadow |
Ellington, CT | 1975 | 100 | 583,679 | 3,901,774 | | 756,263 | 583,679 | 4,658,037 | 5,241,716 | (1,793,920 | ) | 3,447,796 | | ||||||||||||||||||||||||||||||||||
Highland Glen |
Westwood, MA | 1979 | 180 | 2,229,095 | 16,828,153 | | 2,239,543 | 2,229,095 | 19,067,696 | 21,296,791 | (7,067,157 | ) | 14,229,634 | | ||||||||||||||||||||||||||||||||||
Highland Glen II |
Westwood, MA | 2007 | 102 | | 19,875,857 | | 80,545 | | 19,956,402 | 19,956,402 | (2,819,615 | ) | 17,136,787 | | ||||||||||||||||||||||||||||||||||
Highlands at South Plainfield |
South Plainfield, NJ | 2000 | 252 | 10,080,000 | 37,526,912 | | 733,896 | 10,080,000 | 38,260,808 | 48,340,808 | (7,925,678 | ) | 40,415,130 | | ||||||||||||||||||||||||||||||||||
Highlands, The |
Scottsdale, AZ | 1990 | 272 | 11,823,840 | 31,990,970 | | 2,805,757 | 11,823,840 | 34,796,727 | 46,620,567 | (7,688,227 | ) | 38,932,340 | | ||||||||||||||||||||||||||||||||||
Hudson Crossing |
New York, NY (G) | 2003 | 259 | 23,420,000 | 70,086,976 | | 748,402 | 23,420,000 | 70,835,378 | 94,255,378 | (16,184,367 | ) | 78,071,011 | | ||||||||||||||||||||||||||||||||||
Hudson Pointe |
Jersey City, NJ | 2003 | 182 | 5,148,500 | 41,149,117 | | 1,048,724 | 5,148,500 | 42,197,841 | 47,346,341 | (10,223,470 | ) | 37,122,871 | | ||||||||||||||||||||||||||||||||||
Hunt Club II |
Charlotte, NC | (F) | | 100,000 | | | | 100,000 | | 100,000 | | 100,000 | | |||||||||||||||||||||||||||||||||||
Huntington Park |
Everett, WA | 1991 | 381 | 1,597,500 | 14,367,864 | | 3,620,694 | 1,597,500 | 17,988,558 | 19,586,058 | (10,893,191 | ) | 8,692,867 | | ||||||||||||||||||||||||||||||||||
Indian Bend |
Scottsdale, AZ | 1973 | 278 | 1,075,700 | 9,800,330 | | 3,042,609 | 1,075,700 | 12,842,939 | 13,918,639 | (8,082,539 | ) | 5,836,100 | | ||||||||||||||||||||||||||||||||||
Iron Horse Park |
Pleasant Hill, CA | 1973 | 252 | 15,000,000 | 24,335,549 | | 7,755,418 | 15,000,000 | 32,090,967 | 47,090,967 | (8,103,335 | ) | 38,987,632 | | ||||||||||||||||||||||||||||||||||
Isle at Arrowhead Ranch |
Glendale, AZ | 1996 | 256 | 1,650,237 | 19,593,123 | | 1,660,272 | 1,650,237 | 21,253,395 | 22,903,632 | (9,860,515 | ) | 13,043,117 | | ||||||||||||||||||||||||||||||||||
Kempton Downs |
Gresham, OR | 1990 | 278 | 1,217,349 | 10,943,372 | | 2,838,147 | 1,217,349 | 13,781,519 | 14,998,868 | (7,994,662 | ) | 7,004,206 | | ||||||||||||||||||||||||||||||||||
Kenwood Mews |
Burbank, CA | 1991 | 141 | 14,100,000 | 24,662,883 | | 1,627,860 | 14,100,000 | 26,290,743 | 40,390,743 | (5,165,397 | ) | 35,225,346 | | ||||||||||||||||||||||||||||||||||
Key Isle at Windermere |
Ocoee, FL | 2000 | 282 | 8,460,000 | 31,761,470 | | 1,197,975 | 8,460,000 | 32,959,445 | 41,419,445 | (7,409,728 | ) | 34,009,717 | | ||||||||||||||||||||||||||||||||||
Key Isle at Windermere II |
Ocoee, FL | 2008 | 165 | 3,306,286 | 24,519,643 | | 21,547 | 3,306,286 | 24,541,190 | 27,847,476 | (2,038,084 | ) | 25,809,392 | | ||||||||||||||||||||||||||||||||||
Kings Colony (FL) |
Miami, FL | 1986 | 480 | 19,200,000 | 48,379,586 | | 2,692,770 | 19,200,000 | 51,072,356 | 70,272,356 | (12,387,179 | ) | 57,885,177 | | ||||||||||||||||||||||||||||||||||
La Mirage |
San Diego, CA | 1988/1992 | 1,070 | 28,895,200 | 95,567,943 | | 13,968,700 | 28,895,200 | 109,536,643 | 138,431,843 | (51,916,782 | ) | 86,515,061 | | ||||||||||||||||||||||||||||||||||
La Mirage IV |
San Diego, CA | 2001 | 340 | 6,000,000 | 47,449,353 | | 2,944,380 | 6,000,000 | 50,393,733 | 56,393,733 | (16,239,415 | ) | 40,154,318 | | ||||||||||||||||||||||||||||||||||
Laguna Clara |
Santa Clara, CA | 1972 | 264 | 13,642,420 | 29,707,475 | | 3,329,323 | 13,642,420 | 33,036,798 | 46,679,218 | (9,100,501 | ) | 37,578,717 | | ||||||||||||||||||||||||||||||||||
Lake Buena Vista Combined |
Orlando, FL | 2000/2002 | 672 | 23,520,000 | 75,068,206 | | 3,594,116 | 23,520,000 | 78,662,322 | 102,182,322 | (17,301,402 | ) | 84,880,920 | | ||||||||||||||||||||||||||||||||||
Landings at Pembroke Lakes |
Pembroke Pines, FL | 1989 | 358 | 17,900,000 | 24,460,989 | | 4,881,752 | 17,900,000 | 29,342,741 | 47,242,741 | (7,519,945 | ) | 39,722,796 | | ||||||||||||||||||||||||||||||||||
Landings at Port Imperial |
W. New York, NJ | 1999 | 276 | 27,246,045 | 37,741,050 | | 6,567,661 | 27,246,045 | 44,308,711 | 71,554,756 | (15,348,539 | ) | 56,206,217 | | ||||||||||||||||||||||||||||||||||
Las Colinas at Black Canyon |
Phoenix, AZ | 2008 | 304 | 9,000,000 | 35,917,811 | | 115,519 | 9,000,000 | 36,033,330 | 45,033,330 | (4,435,319 | ) | 40,598,011 | | ||||||||||||||||||||||||||||||||||
Legacy at Highlands Ranch |
Highlands Ranch, CO | 1999 | 422 | 6,330,000 | 37,557,013 | | 1,466,728 | 6,330,000 | 39,023,741 | 45,353,741 | (9,805,338 | ) | 35,548,403 | | ||||||||||||||||||||||||||||||||||
Legacy Park Central |
Concord, CA | 2003 | 259 | 6,469,230 | 46,745,854 | | 295,479 | 6,469,230 | 47,041,333 | 53,510,563 | (10,789,289 | ) | 42,721,274 | | ||||||||||||||||||||||||||||||||||
Lexington Farm |
Alpharetta, GA | 1995 | 352 | 3,521,900 | 22,888,305 | | 2,476,212 | 3,521,900 | 25,364,517 | 28,886,417 | (11,200,145 | ) | 17,686,272 | | ||||||||||||||||||||||||||||||||||
Lexington Park |
Orlando, FL | 1988 | 252 | 2,016,000 | 12,346,726 | | 2,450,467 | 2,016,000 | 14,797,193 | 16,813,193 | (7,062,512 | ) | 9,750,681 | | ||||||||||||||||||||||||||||||||||
Little Cottonwoods |
Tempe, AZ | 1984 | 379 | 3,050,133 | 26,991,689 | | 3,737,391 | 3,050,133 | 30,729,080 | 33,779,213 | (14,499,829 | ) | 19,279,384 | | ||||||||||||||||||||||||||||||||||
Longacre House |
New York, NY (G) | 2000 | 293 | 73,170,045 | 53,962,510 | | 125,953 | 73,170,045 | 54,088,463 | 127,258,508 | (7,505,448 | ) | 119,753,060 | | ||||||||||||||||||||||||||||||||||
Longfellow Place |
Boston, MA (G) | 1975 | 710 | 53,164,160 | 183,940,619 | | 47,318,604 | 53,164,160 | 231,259,223 | 284,423,383 | (97,449,615 | ) | 186,973,768 | | ||||||||||||||||||||||||||||||||||
Longwood |
Decatur, GA | 1992 | 268 | 1,454,048 | 13,087,393 | | 2,002,602 | 1,454,048 | 15,089,995 | 16,544,043 | (8,825,354 | ) | 7,718,689 | | ||||||||||||||||||||||||||||||||||
Madison, The |
Alexandria, VA | (F) | | 15,261,108 | 1,080,330 | | | 15,261,108 | 1,080,330 | 16,341,438 | | 16,341,438 | | |||||||||||||||||||||||||||||||||||
Marbrisa |
Tampa, FL | 1984 | 224 | 2,240,000 | 7,183,561 | | 79,738 | 2,240,000 | 7,263,299 | 9,503,299 | (1,234,564 | ) | 8,268,735 | | ||||||||||||||||||||||||||||||||||
Mariners Wharf |
Orange Park, FL | 1989 | 272 | 1,861,200 | 16,744,951 | | 3,244,046 | 1,861,200 | 19,988,997 | 21,850,197 | (9,702,938 | ) | 12,147,259 | | ||||||||||||||||||||||||||||||||||
Market Street Landing |
Seattle, WA | (F) | | 12,542,418 | 297,637 | | | 12,542,418 | 297,637 | 12,840,055 | | 12,840,055 | | |||||||||||||||||||||||||||||||||||
Marquessa |
Corona Hills, CA | 1992 | 336 | 6,888,500 | 21,604,584 | | 2,726,408 | 6,888,500 | 24,330,992 | 31,219,492 | (11,834,160 | ) | 19,385,332 | | ||||||||||||||||||||||||||||||||||
Martha Lake |
Lynnwood, WA | 1991 | 155 | 821,200 | 7,405,070 | | 1,985,277 | 821,200 | 9,390,347 | 10,211,547 | (4,980,064 | ) | 5,231,483 | | ||||||||||||||||||||||||||||||||||
Martine, The |
Bellevue, WA | 1984 | 67 | 3,200,000 | 9,616,264 | | 2,642,670 | 3,200,000 | 12,258,934 | 15,458,934 | (1,957,800 | ) | 13,501,134 | | ||||||||||||||||||||||||||||||||||
Merritt at Satellite Place |
Duluth, GA | 1999 | 424 | 3,400,000 | 30,115,674 | | 2,440,228 | 3,400,000 | 32,555,902 | 35,955,902 | (13,072,220 | ) | 22,883,682 | | ||||||||||||||||||||||||||||||||||
Mill Pond |
Millersville, MD | 1984 | 240 | 2,880,000 | 8,468,014 | | 2,718,776 | 2,880,000 | 11,186,790 | 14,066,790 | (5,505,405 | ) | 8,561,385 | | ||||||||||||||||||||||||||||||||||
Mira Flores |
Palm Beach Gardens, FL | 1996 | 352 | 7,039,313 | 22,515,299 | | 2,298,916 | 7,039,313 | 24,814,215 | 31,853,528 | (8,485,263 | ) | 23,368,265 | |
S-5
Table of Contents
ERP OPERATING LIMITED PARTNERSHIP
Schedule III Real Estate and Accumulated Depreciation
December 31, 2010
Schedule III Real Estate and Accumulated Depreciation
December 31, 2010
Cost Capitalized | ||||||||||||||||||||||||||||||||||||||||||||||||
Subsequent to | Gross Amount Carried | |||||||||||||||||||||||||||||||||||||||||||||||
Initial Cost to | Acquisition | at Close of | ||||||||||||||||||||||||||||||||||||||||||||||
Description | Company | (Improvements, net) (E) | Period 12/31/10 | |||||||||||||||||||||||||||||||||||||||||||||
Date of | Building & | Building & | Building & | Accumulated | Investment in Real | |||||||||||||||||||||||||||||||||||||||||||
Apartment Name | Location | Construction | Units (H) | Land | Fixtures | Land | Fixtures | Land | Fixtures (A) | Total (B) | Depreciation (C) | Estate, Net at 12/31/10 (B) | Encumbrances | |||||||||||||||||||||||||||||||||||
Mission Bay |
Orlando, FL | 1991 | 304 | 2,432,000 | 21,623,560 | | 2,717,235 | 2,432,000 | 24,340,795 | 26,772,795 | (10,820,242 | ) | 15,952,553 | | ||||||||||||||||||||||||||||||||||
Mission Verde, LLC |
San Jose, CA | 1986 | 108 | 5,190,700 | 9,679,109 | | 3,151,242 | 5,190,700 | 12,830,351 | 18,021,051 | (5,623,277 | ) | 12,397,774 | | ||||||||||||||||||||||||||||||||||
Morningside |
Scottsdale, AZ | 1989 | 160 | 670,470 | 12,607,976 | | 1,697,299 | 670,470 | 14,305,275 | 14,975,745 | (6,740,861 | ) | 8,234,884 | | ||||||||||||||||||||||||||||||||||
Mosaic at Largo Station |
Hyattsville, MD | 2008 | 242 | 4,120,800 | 42,477,297 | | 237,451 | 4,120,800 | 42,714,748 | 46,835,548 | (4,141,764 | ) | 42,693,784 | | ||||||||||||||||||||||||||||||||||
Mozaic at Union Station |
Los Angeles, CA | 2007 | 272 | 8,500,000 | 52,583,270 | | 668,419 | 8,500,000 | 53,251,689 | 61,751,689 | (8,972,618 | ) | 52,779,071 | | ||||||||||||||||||||||||||||||||||
New River Cove |
Davie, FL | 1999 | 316 | 15,800,000 | 46,142,895 | | 1,049,654 | 15,800,000 | 47,192,549 | 62,992,549 | (10,341,684 | ) | 52,650,865 | | ||||||||||||||||||||||||||||||||||
Northampton 1 |
Largo, MD | 1977 | 344 | 1,843,200 | 17,528,381 | | 5,798,143 | 1,843,200 | 23,326,524 | 25,169,724 | (14,229,754 | ) | 10,939,970 | | ||||||||||||||||||||||||||||||||||
Northampton 2 |
Largo, MD | 1988 | 276 | 1,513,500 | 14,246,990 | | 3,654,124 | 1,513,500 | 17,901,114 | 19,414,614 | (10,571,731 | ) | 8,842,883 | | ||||||||||||||||||||||||||||||||||
Northglen |
Valencia, CA | 1988 | 234 | 9,360,000 | 20,778,553 | | 1,728,818 | 9,360,000 | 22,507,371 | 31,867,371 | (8,256,285 | ) | 23,611,086 | | ||||||||||||||||||||||||||||||||||
Northlake (MD) |
Germantown, MD | 1985 | 304 | 15,000,000 | 23,142,302 | | 9,754,730 | 15,000,000 | 32,897,032 | 47,897,032 | (9,909,101 | ) | 37,987,931 | | ||||||||||||||||||||||||||||||||||
Northridge |
Pleasant Hill, CA | 1974 | 221 | 5,527,800 | 14,691,705 | | 8,471,887 | 5,527,800 | 23,163,592 | 28,691,392 | (9,697,063 | ) | 18,994,329 | | ||||||||||||||||||||||||||||||||||
Oak Park North |
Agoura Hills, CA | 1990 | 220 | 1,706,900 | 15,362,666 | | 2,806,978 | 1,706,900 | 18,169,644 | 19,876,544 | (9,627,790 | ) | 10,248,754 | | ||||||||||||||||||||||||||||||||||
Oak Park South |
Agoura Hills, CA | 1989 | 224 | 1,683,800 | 15,154,608 | | 2,923,629 | 1,683,800 | 18,078,237 | 19,762,037 | (9,624,230 | ) | 10,137,807 | | ||||||||||||||||||||||||||||||||||
Oaks at Falls Church |
Falls Church, VA | 1966 | 176 | 20,240,000 | 20,152,616 | | 3,552,434 | 20,240,000 | 23,705,050 | 43,945,050 | (5,665,262 | ) | 38,279,788 | | ||||||||||||||||||||||||||||||||||
Ocean Crest |
Solana Beach, CA | 1986 | 146 | 5,111,200 | 11,910,438 | | 2,058,043 | 5,111,200 | 13,968,481 | 19,079,681 | (6,514,987 | ) | 12,564,694 | | ||||||||||||||||||||||||||||||||||
Ocean Walk |
Key West, FL | 1990 | 297 | 2,838,749 | 25,545,009 | | 3,233,758 | 2,838,749 | 28,778,767 | 31,617,516 | (13,599,381 | ) | 18,018,135 | | ||||||||||||||||||||||||||||||||||
Olympus Towers |
Seattle, WA (G) | 2000 | 328 | 14,752,034 | 73,335,425 | | 2,226,097 | 14,752,034 | 75,561,522 | 90,313,556 | (19,377,834 | ) | 70,935,722 | | ||||||||||||||||||||||||||||||||||
Orchard Ridge |
Lynnwood, WA | 1988 | 104 | 480,600 | 4,372,033 | | 1,127,901 | 480,600 | 5,499,934 | 5,980,534 | (3,295,398 | ) | 2,685,136 | | ||||||||||||||||||||||||||||||||||
Overlook Manor |
Frederick, MD | 1980/1985 | 108 | 1,299,100 | 3,930,931 | | 2,142,057 | 1,299,100 | 6,072,988 | 7,372,088 | (3,277,788 | ) | 4,094,300 | | ||||||||||||||||||||||||||||||||||
Overlook Manor II |
Frederick, MD | 1980/1985 | 182 | 2,186,300 | 6,262,597 | | 1,253,022 | 2,186,300 | 7,515,619 | 9,701,919 | (3,549,205 | ) | 6,152,714 | | ||||||||||||||||||||||||||||||||||
Paces Station |
Atlanta, GA | 1984-1989 | 610 | 4,801,500 | 32,548,053 | | 8,202,985 | 4,801,500 | 40,751,038 | 45,552,538 | (20,808,476 | ) | 24,744,062 | | ||||||||||||||||||||||||||||||||||
Palm Trace Landings |
Davie, FL | 1995 | 768 | 38,400,000 | 105,693,432 | | 2,605,905 | 38,400,000 | 108,299,337 | 146,699,337 | (23,469,327 | ) | 123,230,010 | | ||||||||||||||||||||||||||||||||||
Panther Ridge |
Federal Way, WA | 1980 | 260 | 1,055,800 | 9,506,117 | | 1,846,801 | 1,055,800 | 11,352,918 | 12,408,718 | (5,866,485 | ) | 6,542,233 | | ||||||||||||||||||||||||||||||||||
Parc 77 |
New York, NY (G) | 1903 | 137 | 40,504,000 | 18,025,679 | | 4,115,467 | 40,504,000 | 22,141,146 | 62,645,146 | (4,773,963 | ) | 57,871,183 | | ||||||||||||||||||||||||||||||||||
Parc Cameron |
New York, NY (G) | 1927 | 166 | 37,600,000 | 9,855,597 | | 5,120,583 | 37,600,000 | 14,976,180 | 52,576,180 | (3,867,865 | ) | 48,708,315 | | ||||||||||||||||||||||||||||||||||
Parc Coliseum |
New York, NY (G) | 1910 | 177 | 52,654,000 | 23,045,751 | | 6,947,750 | 52,654,000 | 29,993,501 | 82,647,501 | (6,372,704 | ) | 76,274,797 | | ||||||||||||||||||||||||||||||||||
Park at Turtle Run, The |
Coral Springs, FL | 2001 | 257 | 15,420,000 | 36,064,629 | | 898,823 | 15,420,000 | 36,963,452 | 52,383,452 | (9,407,101 | ) | 42,976,351 | | ||||||||||||||||||||||||||||||||||
Park West (CA) |
Los Angeles, CA | 1987/1990 | 444 | 3,033,500 | 27,302,383 | | 5,418,219 | 3,033,500 | 32,720,602 | 35,754,102 | (17,933,416 | ) | 17,820,686 | | ||||||||||||||||||||||||||||||||||
Parkside |
Union City, CA | 1979 | 208 | 6,246,700 | 11,827,453 | | 3,310,231 | 6,246,700 | 15,137,684 | 21,384,384 | (7,795,045 | ) | 13,589,339 | | ||||||||||||||||||||||||||||||||||
Parkview Terrace |
Redlands, CA | 1986 | 558 | 4,969,200 | 35,653,777 | | 11,282,338 | 4,969,200 | 46,936,115 | 51,905,315 | (22,196,279 | ) | 29,709,036 | | ||||||||||||||||||||||||||||||||||
Phillips Park |
Wellesley, MA | 1988 | 49 | 816,922 | 5,460,955 | | 936,091 | 816,922 | 6,397,046 | 7,213,968 | (2,475,515 | ) | 4,738,453 | | ||||||||||||||||||||||||||||||||||
Pine Harbour |
Orlando, FL | 1991 | 366 | 1,664,300 | 14,970,915 | | 3,529,258 | 1,664,300 | 18,500,173 | 20,164,473 | (11,225,249 | ) | 8,939,224 | | ||||||||||||||||||||||||||||||||||
Playa Pacifica |
Hermosa Beach,CA | 1972 | 285 | 35,100,000 | 33,473,822 | | 7,145,521 | 35,100,000 | 40,619,343 | 75,719,343 | (10,641,111 | ) | 65,078,232 | | ||||||||||||||||||||||||||||||||||
Pointe at South Mountain |
Phoenix, AZ | 1988 | 364 | 2,228,800 | 20,059,311 | | 3,210,958 | 2,228,800 | 23,270,269 | 25,499,069 | (11,847,168 | ) | 13,651,901 | | ||||||||||||||||||||||||||||||||||
Polos East |
Orlando, FL | 1991 | 308 | 1,386,000 | 19,058,620 | | 2,188,231 | 1,386,000 | 21,246,851 | 22,632,851 | (9,567,266 | ) | 13,065,585 | | ||||||||||||||||||||||||||||||||||
Port Royale |
Ft. Lauderdale, FL (G) | 1988 | 252 | 1,754,200 | 15,789,873 | | 7,514,240 | 1,754,200 | 23,304,113 | 25,058,313 | (12,612,882 | ) | 12,445,431 | | ||||||||||||||||||||||||||||||||||
Port Royale II |
Ft. Lauderdale, FL (G) | 1988 | 161 | 1,022,200 | 9,203,166 | | 4,702,265 | 1,022,200 | 13,905,431 | 14,927,631 | (7,140,443 | ) | 7,787,188 | | ||||||||||||||||||||||||||||||||||
Port Royale III |
Ft. Lauderdale, FL (G) | 1988 | 324 | 7,454,900 | 14,725,802 | | 8,935,675 | 7,454,900 | 23,661,477 | 31,116,377 | (11,497,857 | ) | 19,618,520 | | ||||||||||||||||||||||||||||||||||
Port Royale IV |
Ft. Lauderdale, FL | (F) | | | 387,471 | | | | 387,471 | 387,471 | | 387,471 | | |||||||||||||||||||||||||||||||||||
Portofino |
Chino Hills, CA | 1989 | 176 | 3,572,400 | 14,660,994 | | 2,150,998 | 3,572,400 | 16,811,992 | 20,384,392 | (7,854,366 | ) | 12,530,026 | | ||||||||||||||||||||||||||||||||||
Portofino (Val) |
Valencia, CA | 1989 | 216 | 8,640,000 | 21,487,126 | | 2,302,820 | 8,640,000 | 23,789,946 | 32,429,946 | (8,794,584 | ) | 23,635,362 | | ||||||||||||||||||||||||||||||||||
Portside Towers |
Jersey City, NJ (G) | 1992-1997 | 527 | 22,487,006 | 96,842,913 | | 14,773,378 | 22,487,006 | 111,616,291 | 134,103,297 | (47,349,520 | ) | 86,753,777 | | ||||||||||||||||||||||||||||||||||
Preserve at Deer Creek |
Deerfield Beach, FL | 1997 | 540 | 13,500,000 | 60,011,208 | | 3,069,187 | 13,500,000 | 63,080,395 | 76,580,395 | (16,723,806 | ) | 59,856,589 | | ||||||||||||||||||||||||||||||||||
Prime, The |
Arlington, VA | 2002 | 256 | 32,000,000 | 64,436,539 | | 587,595 | 32,000,000 | 65,024,134 | 97,024,134 | (12,202,034 | ) | 84,822,100 | | ||||||||||||||||||||||||||||||||||
Promenade at Aventura |
Aventura, FL | 1995 | 296 | 13,320,000 | 30,353,748 | | 4,740,072 | 13,320,000 | 35,093,820 | 48,413,820 | (12,325,089 | ) | 36,088,731 | | ||||||||||||||||||||||||||||||||||
Promenade at Town Center I |
Valencia, CA | 2001 | 294 | 14,700,000 | 35,390,279 | | 2,762,304 | 14,700,000 | 38,152,583 | 52,852,583 | (10,327,370 | ) | 42,525,213 | | ||||||||||||||||||||||||||||||||||
Promenade at Wyndham Lakes |
Coral Springs, FL | 1998 | 332 | 6,640,000 | 26,743,760 | | 3,364,705 | 6,640,000 | 30,108,465 | 36,748,465 | (10,964,932 | ) | 25,783,533 | | ||||||||||||||||||||||||||||||||||
Promenade Terrace |
Corona, CA | 1990 | 330 | 2,272,800 | 20,546,289 | | 4,744,546 | 2,272,800 | 25,290,835 | 27,563,635 | (13,575,380 | ) | 13,988,255 | | ||||||||||||||||||||||||||||||||||
Promontory Pointe I & II |
Phoenix, AZ | 1984/1996 | 424 | 2,355,509 | 30,421,840 | | 3,698,629 | 2,355,509 | 34,120,469 | 36,475,978 | (16,314,043 | ) | 20,161,935 | | ||||||||||||||||||||||||||||||||||
Prospect Towers |
Hackensack, NJ | 1995 | 157 | 3,926,600 | 31,738,452 | | 2,938,287 | 3,926,600 | 34,676,739 | 38,603,339 | (13,635,911 | ) | 24,967,428 | | ||||||||||||||||||||||||||||||||||
Prospect Towers II |
Hackensack, NJ | 2002 | 203 | 4,500,000 | 33,104,733 | | 2,070,180 | 4,500,000 | 35,174,913 | 39,674,913 | (10,813,863 | ) | 28,861,050 | | ||||||||||||||||||||||||||||||||||
Ravens Crest |
Plainsboro, NJ | 1984 | 704 | 4,670,850 | 42,080,642 | | 11,945,748 | 4,670,850 | 54,026,390 | 58,697,240 | (31,532,339 | ) | 27,164,901 | | ||||||||||||||||||||||||||||||||||
Redmond Ridge |
Redmond, WA | 2008 | 321 | 6,975,705 | 46,175,001 | | 73,615 | 6,975,705 | 46,248,616 | 53,224,321 | (4,628,114 | ) | 48,596,207 | | ||||||||||||||||||||||||||||||||||
Red 160 (fka Redmond Way) |
Redmond, WA (G) | (F) | | 15,546,376 | 61,417,903 | | 9,488 | 15,546,376 | 61,427,391 | 76,973,767 | (339 | ) | 76,973,428 | | ||||||||||||||||||||||||||||||||||
Regency Palms |
Huntington Beach, CA | 1969 | 310 | 1,857,400 | 16,713,254 | | 4,433,614 | 1,857,400 | 21,146,868 | 23,004,268 | (11,462,162 | ) | 11,542,106 | | ||||||||||||||||||||||||||||||||||
Regency Park |
Centreville, VA | 1989 | 252 | 2,521,500 | 16,200,666 | | 7,802,524 | 2,521,500 | 24,003,190 | 26,524,690 | (11,693,111 | ) | 14,831,579 | | ||||||||||||||||||||||||||||||||||
Registry |
Northglenn, CO | 1986 | 208 | 2,000,000 | 10,926,759 | | 48,337 | 2,000,000 | 10,975,096 | 12,975,096 | (1,278,875 | ) | 11,696,221 | | ||||||||||||||||||||||||||||||||||
Remington Place |
Phoenix, AZ | 1983 | 412 | 1,492,750 | 13,377,478 | | 4,637,494 | 1,492,750 | 18,014,972 | 19,507,722 | (10,299,256 | ) | 9,208,466 | | ||||||||||||||||||||||||||||||||||
Renaissance Villas |
Berkeley, CA (G) | 1998 | 34 | 2,458,000 | 4,542,000 | | 5,418 | 2,458,000 | 4,547,418 | 7,005,418 | (332,879 | ) | 6,672,539 | | ||||||||||||||||||||||||||||||||||
Reserve at Ashley Lake |
Boynton Beach, FL | 1990 | 440 | 3,520,400 | 23,332,494 | | 4,721,183 | 3,520,400 | 28,053,677 | 31,574,077 | (13,452,026 | ) | 18,122,051 | | ||||||||||||||||||||||||||||||||||
Reserve at Town Center |
Loudon, VA | 2002 | 290 | 3,144,056 | 27,669,121 | | 712,324 | 3,144,056 | 28,381,445 | 31,525,501 | (7,401,808 | ) | 24,123,693 | | ||||||||||||||||||||||||||||||||||
Reserve at Town Center II (WA) |
Mill Creek, WA | 2009 | 100 | 4,310,417 | 17,172,642 | | 7,133 | 4,310,417 | 17,179,775 | 21,490,192 | (614,973 | ) | 20,875,219 | | ||||||||||||||||||||||||||||||||||
Reserve at Town Center III |
Mill Creek, WA | (F) | | 2,089,388 | 220,235 | | | 2,089,388 | 220,235 | 2,309,623 | | 2,309,623 | | |||||||||||||||||||||||||||||||||||
Retreat, The |
Phoenix, AZ | 1999 | 480 | 3,475,114 | 27,265,252 | | 2,380,882 | 3,475,114 | 29,646,134 | 33,121,248 | (12,339,194 | ) | 20,782,054 | | ||||||||||||||||||||||||||||||||||
Rianna I |
Seattle, WA (G) | 2000 | 78 | 2,268,160 | 14,864,482 | | 84,986 | 2,268,160 | 14,949,468 | 17,217,628 | (1,125,268 | ) | 16,092,360 | | ||||||||||||||||||||||||||||||||||
Ridgewood Village I&II |
San Diego, CA | 1997 | 408 | 11,809,500 | 34,004,048 | | 2,195,996 | 11,809,500 | 36,200,044 | 48,009,544 | (14,118,993 | ) | 33,890,551 | | ||||||||||||||||||||||||||||||||||
River Pointe at Den Rock Park |
Lawrence, MA | 2000 | 174 | 4,615,702 | 18,440,147 | | 1,212,909 | 4,615,702 | 19,653,056 | 24,268,758 | (6,078,818 | ) | 18,189,940 | | ||||||||||||||||||||||||||||||||||
River Tower |
New York, NY (G) | 1982 | 323 | 118,669,441 | 98,880,559 | | 401,052 | 118,669,441 | 99,281,611 | 217,951,052 | (12,970,964 | ) | 204,980,088 | | ||||||||||||||||||||||||||||||||||
Rivers Bend (CT) |
Windsor, CT | 1973 | 373 | 3,325,517 | 22,573,826 | | 2,724,959 | 3,325,517 | 25,298,785 | 28,624,302 | (9,670,355 | ) | 18,953,947 | | ||||||||||||||||||||||||||||||||||
Riverview Condominiums |
Norwalk, CT | 1991 | 92 | 2,300,000 | 7,406,730 | | 1,806,846 | 2,300,000 | 9,213,576 | 11,513,576 | (4,117,696 | ) | 7,395,880 | | ||||||||||||||||||||||||||||||||||
Royal Oaks (FL) |
Jacksonville, FL | 1991 | 284 | 1,988,000 | 13,645,117 | | 3,882,711 | 1,988,000 | 17,527,828 | 19,515,828 | (7,780,869 | ) | 11,734,959 | | ||||||||||||||||||||||||||||||||||
Sabal Palm at Carrollwood Place |
Tampa, FL | 1995 | 432 | 3,888,000 | 26,911,542 | | 2,533,589 | 3,888,000 | 29,445,131 | 33,333,131 | (12,979,307 | ) | 20,353,824 | | ||||||||||||||||||||||||||||||||||
Sabal Palm at Lake Buena Vista |
Orlando, FL | 1988 | 400 | 2,800,000 | 23,687,893 | | 3,982,057 | 2,800,000 | 27,669,950 | 30,469,950 | (12,197,653 | ) | 18,272,297 | | ||||||||||||||||||||||||||||||||||
Sabal Palm at Metrowest |
Orlando, FL | 1998 | 411 | 4,110,000 | 38,394,865 | | 3,876,633 | 4,110,000 | 42,271,498 | 46,381,498 | (18,443,292 | ) | 27,938,206 | |
S-6
Table of Contents
ERP OPERATING LIMITED PARTNERSHIP
Schedule III Real Estate and Accumulated Depreciation
December 31, 2010
Schedule III Real Estate and Accumulated Depreciation
December 31, 2010
Cost Capitalized | ||||||||||||||||||||||||||||||||||||||||||||||||
Subsequent to | Gross Amount Carried | |||||||||||||||||||||||||||||||||||||||||||||||
Initial Cost to | Acquisition | at Close of | ||||||||||||||||||||||||||||||||||||||||||||||
Description | Company | (Improvements, net) (E) | Period 12/31/10 | |||||||||||||||||||||||||||||||||||||||||||||
Date of | Building & | Building & | Building & | Accumulated | Investment in Real | |||||||||||||||||||||||||||||||||||||||||||
Apartment Name | Location | Construction | Units (H) | Land | Fixtures | Land | Fixtures | Land | Fixtures (A) | Total (B) | Depreciation (C) | Estate, Net at 12/31/10 (B) | Encumbrances | |||||||||||||||||||||||||||||||||||
Sabal Palm at Metrowest II |
Orlando, FL | 1997 | 456 | 4,560,000 | 33,907,283 | | 2,691,106 | 4,560,000 | 36,598,389 | 41,158,389 | (15,830,427 | ) | 25,327,962 | | ||||||||||||||||||||||||||||||||||
Sabal Pointe |
Coral Springs, FL | 1995 | 275 | 1,951,600 | 17,570,508 | | 3,961,145 | 1,951,600 | 21,531,653 | 23,483,253 | (11,635,146 | ) | 11,848,107 | | ||||||||||||||||||||||||||||||||||
Saddle Ridge |
Ashburn, VA | 1989 | 216 | 1,364,800 | 12,283,616 | | 2,201,030 | 1,364,800 | 14,484,646 | 15,849,446 | (7,934,560 | ) | 7,914,886 | | ||||||||||||||||||||||||||||||||||
Sage |
Everett, WA | 2002 | 123 | 2,500,000 | 12,021,256 | | 412,814 | 2,500,000 | 12,434,070 | 14,934,070 | (2,576,867 | ) | 12,357,203 | | ||||||||||||||||||||||||||||||||||
Savannah at Park Place |
Atlanta, GA | 2001 | 416 | 7,696,095 | 34,114,542 | | 2,628,399 | 7,696,095 | 36,742,941 | 44,439,036 | (10,138,404 | ) | 34,300,632 | | ||||||||||||||||||||||||||||||||||
Savoy III |
Aurora, CO | (F) | | 659,165 | 4,749,723 | | | 659,165 | 4,749,723 | 5,408,888 | | 5,408,888 | | |||||||||||||||||||||||||||||||||||
Sawgrass Cove |
Bradenton, FL | 1991 | 336 | 3,360,000 | 12,587,189 | | 80,974 | 3,360,000 | 12,668,163 | 16,028,163 | (1,947,404 | ) | 14,080,759 | | ||||||||||||||||||||||||||||||||||
Scarborough Square |
Rockville, MD | 1967 | 121 | 1,815,000 | 7,608,126 | | 2,394,761 | 1,815,000 | 10,002,887 | 11,817,887 | (4,923,278 | ) | 6,894,609 | | ||||||||||||||||||||||||||||||||||
Sedona Ridge |
Phoenix, AZ | 1989 | 250 | 3,750,000 | 14,750,000 | | 254,926 | 3,750,000 | 15,004,926 | 18,754,926 | (2,039,282 | ) | 16,715,644 | | ||||||||||||||||||||||||||||||||||
Seeley Lake |
Lakewood, WA | 1990 | 522 | 2,760,400 | 24,845,286 | | 4,006,480 | 2,760,400 | 28,851,766 | 31,612,166 | (14,437,537 | ) | 17,174,629 | | ||||||||||||||||||||||||||||||||||
Seventh & James |
Seattle, WA | 1992 | 96 | 663,800 | 5,974,803 | | 2,878,988 | 663,800 | 8,853,791 | 9,517,591 | (4,849,519 | ) | 4,668,072 | | ||||||||||||||||||||||||||||||||||
Shadow Creek |
Winter Springs, FL | 2000 | 280 | 6,000,000 | 21,719,768 | | 1,434,843 | 6,000,000 | 23,154,611 | 29,154,611 | (6,340,966 | ) | 22,813,645 | | ||||||||||||||||||||||||||||||||||
Sheridan Lake Club |
Dania Beach, FL | 2001 | 240 | 12,000,000 | 23,170,580 | | 1,252,843 | 12,000,000 | 24,423,423 | 36,423,423 | (5,113,176 | ) | 31,310,247 | | ||||||||||||||||||||||||||||||||||
Sheridan Ocean Club combined |
Dania Beach, FL | 1991 | 648 | 18,313,414 | 47,091,593 | | 14,017,392 | 18,313,414 | 61,108,985 | 79,422,399 | (21,027,176 | ) | 58,395,223 | | ||||||||||||||||||||||||||||||||||
Siena Terrace |
Lake Forest, CA | 1988 | 356 | 8,900,000 | 24,083,024 | | 2,738,600 | 8,900,000 | 26,821,624 | 35,721,624 | (11,637,233 | ) | 24,084,391 | | ||||||||||||||||||||||||||||||||||
Silver Springs (FL) |
Jacksonville, FL | 1985 | 432 | 1,831,100 | 16,474,735 | | 5,779,723 | 1,831,100 | 22,254,458 | 24,085,558 | (12,404,671 | ) | 11,680,887 | | ||||||||||||||||||||||||||||||||||
Skycrest |
Valencia, CA | 1999 | 264 | 10,560,000 | 25,574,457 | | 1,870,144 | 10,560,000 | 27,444,601 | 38,004,601 | (10,001,263 | ) | 28,003,338 | | ||||||||||||||||||||||||||||||||||
Skylark |
Union City, CA | 1986 | 174 | 1,781,600 | 16,731,916 | | 1,608,125 | 1,781,600 | 18,340,041 | 20,121,641 | (8,137,578 | ) | 11,984,063 | | ||||||||||||||||||||||||||||||||||
Skyline Terrace |
Burlingame, CA | 1967/1987 | 138 | 16,836,000 | 35,414,000 | | 469 | 16,836,000 | 35,414,469 | 52,250,469 | (227,411 | ) | 52,023,058 | | ||||||||||||||||||||||||||||||||||
Skyline Towers |
Falls Church, VA (G) | 1971 | 939 | 78,278,200 | 91,485,591 | | 27,969,652 | 78,278,200 | 119,455,243 | 197,733,443 | (30,881,457 | ) | 166,851,986 | | ||||||||||||||||||||||||||||||||||
Skyview |
Rancho Santa Margarita, CA | 1999 | 260 | 3,380,000 | 21,952,863 | | 1,667,929 | 3,380,000 | 23,620,792 | 27,000,792 | (9,657,421 | ) | 17,343,371 | | ||||||||||||||||||||||||||||||||||
Sonoran |
Phoenix, AZ | 1995 | 429 | 2,361,922 | 31,841,724 | | 2,900,306 | 2,361,922 | 34,742,030 | 37,103,952 | (16,082,432 | ) | 21,021,520 | | ||||||||||||||||||||||||||||||||||
Southwood |
Palo Alto, CA | 1985 | 100 | 6,936,600 | 14,324,069 | | 2,065,301 | 6,936,600 | 16,389,370 | 23,325,970 | (7,489,798 | ) | 15,836,172 | | ||||||||||||||||||||||||||||||||||
Springbrook Estates |
Riverside, CA | (F) | | 18,200,000 | | | | 18,200,000 | | 18,200,000 | | 18,200,000 | | |||||||||||||||||||||||||||||||||||
St. Andrews at Winston Park |
Coconut Creek, FL | 1997 | 284 | 5,680,000 | 19,812,090 | | 2,144,175 | 5,680,000 | 21,956,265 | 27,636,265 | (7,512,645 | ) | 20,123,620 | | ||||||||||||||||||||||||||||||||||
Stoney Creek |
Lakewood, WA | 1990 | 231 | 1,215,200 | 10,938,134 | | 2,267,480 | 1,215,200 | 13,205,614 | 14,420,814 | (6,703,659 | ) | 7,717,155 | | ||||||||||||||||||||||||||||||||||
Summerwood |
Hayward, CA | 1982 | 162 | 4,810,644 | 6,942,743 | | 2,132,610 | 4,810,644 | 9,075,353 | 13,885,997 | (4,231,400 | ) | 9,654,597 | | ||||||||||||||||||||||||||||||||||
Summit & Birch Hill |
Farmington, CT | 1967 | 186 | 1,757,438 | 11,748,112 | | 2,916,135 | 1,757,438 | 14,664,247 | 16,421,685 | (5,733,897 | ) | 10,687,788 | | ||||||||||||||||||||||||||||||||||
Summit at Lake Union |
Seattle, WA | 1995 -1997 | 150 | 1,424,700 | 12,852,461 | | 3,097,192 | 1,424,700 | 15,949,653 | 17,374,353 | (7,701,759 | ) | 9,672,594 | | ||||||||||||||||||||||||||||||||||
Surprise Lake Village |
Milton, WA | 1986 | 338 | 4,162,543 | 21,995,958 | | 167,483 | 4,162,543 | 22,163,441 | 26,325,984 | (2,484,576 | ) | 23,841,408 | | ||||||||||||||||||||||||||||||||||
Sycamore Creek |
Scottsdale, AZ | 1984 | 350 | 3,152,000 | 19,083,727 | | 3,055,695 | 3,152,000 | 22,139,422 | 25,291,422 | (10,946,251 | ) | 14,345,171 | | ||||||||||||||||||||||||||||||||||
Tanasbourne Terrace |
Hillsboro, OR | 1986-1989 | 373 | 1,876,700 | 16,891,205 | | 3,764,711 | 1,876,700 | 20,655,916 | 22,532,616 | (12,425,399 | ) | 10,107,217 | | ||||||||||||||||||||||||||||||||||
Third Square |
Cambridge, MA (G) | 2008/2009 | 482 | 27,812,384 | 228,734,105 | | 567,932 | 27,812,384 | 229,302,037 | 257,114,421 | (15,770,134 | ) | 241,344,287 | | ||||||||||||||||||||||||||||||||||
Tortuga Bay |
Orlando, FL | 2004 | 314 | 6,280,000 | 32,121,779 | | 985,669 | 6,280,000 | 33,107,448 | 39,387,448 | (7,923,623 | ) | 31,463,825 | | ||||||||||||||||||||||||||||||||||
Toscana |
Irvine, CA | 1991/1993 | 563 | 39,410,000 | 50,806,072 | | 6,395,983 | 39,410,000 | 57,202,055 | 96,612,055 | (21,654,115 | ) | 74,957,940 | | ||||||||||||||||||||||||||||||||||
Townes at Herndon |
Herndon, VA | 2002 | 218 | 10,900,000 | 49,216,125 | | 576,648 | 10,900,000 | 49,792,773 | 60,692,773 | (10,492,949 | ) | 50,199,824 | | ||||||||||||||||||||||||||||||||||
Trump Place, 140 Riverside |
New York, NY (G) | 2003 | 354 | 103,539,100 | 94,082,725 | | 1,245,121 | 103,539,100 | 95,327,846 | 198,866,946 | (20,098,341 | ) | 178,768,605 | | ||||||||||||||||||||||||||||||||||
Trump Place, 160 Riverside |
New York, NY (G) | 2001 | 455 | 139,933,500 | 190,964,745 | | 4,193,547 | 139,933,500 | 195,158,292 | 335,091,792 | (39,008,991 | ) | 296,082,801 | | ||||||||||||||||||||||||||||||||||
Trump Place, 180 Riverside |
New York, NY (G) | 1998 | 516 | 144,968,250 | 138,346,681 | | 5,245,129 | 144,968,250 | 143,591,810 | 288,560,060 | (30,420,203 | ) | 258,139,857 | | ||||||||||||||||||||||||||||||||||
Uwajimaya Village |
Seattle, WA | 2002 | 176 | 8,800,000 | 22,188,288 | | 231,285 | 8,800,000 | 22,419,573 | 31,219,573 | (5,828,856 | ) | 25,390,717 | | ||||||||||||||||||||||||||||||||||
Valencia Plantation |
Orlando, FL | 1990 | 194 | 873,000 | 12,819,377 | | 2,124,405 | 873,000 | 14,943,782 | 15,816,782 | (6,429,174 | ) | 9,387,608 | | ||||||||||||||||||||||||||||||||||
Vantage Pointe |
San Diego, CA (G) | 2009 | 679 | 9,403,960 | 190,596,040 | | 878,314 | 9,403,960 | 191,474,354 | 200,878,314 | (2,779,752 | ) | 198,098,562 | | ||||||||||||||||||||||||||||||||||
Versailles (K-Town) |
Los Angeles, CA | 2008 | 225 | 10,590,975 | 44,409,025 | | 17,858 | 10,590,975 | 44,426,883 | 55,017,858 | (2,028,003 | ) | 52,989,855 | | ||||||||||||||||||||||||||||||||||
Victor on Venice |
Los Angeles, CA (G) | 2006 | 115 | 10,350,000 | 35,433,437 | | 105,588 | 10,350,000 | 35,539,025 | 45,889,025 | (6,273,594 | ) | 39,615,431 | | ||||||||||||||||||||||||||||||||||
Villa Encanto |
Phoenix, AZ | 1983 | 385 | 2,884,447 | 22,197,363 | | 3,530,421 | 2,884,447 | 25,727,784 | 28,612,231 | (12,649,439 | ) | 15,962,792 | | ||||||||||||||||||||||||||||||||||
Villa Solana |
Laguna Hills, CA | 1984 | 272 | 1,665,100 | 14,985,678 | | 6,271,253 | 1,665,100 | 21,256,931 | 22,922,031 | (12,286,928 | ) | 10,635,103 | | ||||||||||||||||||||||||||||||||||
Village at Bear Creek |
Lakewood, CO | 1987 | 472 | 4,519,700 | 40,676,390 | | 4,115,836 | 4,519,700 | 44,792,226 | 49,311,926 | (21,310,226 | ) | 28,001,700 | | ||||||||||||||||||||||||||||||||||
Vista Del Largo |
Mission Viejo, CA | 1986-1988 | 608 | 4,525,800 | 40,736,293 | | 10,948,915 | 4,525,800 | 51,685,208 | 56,211,008 | (30,191,450 | ) | 26,019,558 | | ||||||||||||||||||||||||||||||||||
Vista Grove |
Mesa, AZ | 1997/1998 | 224 | 1,341,796 | 12,157,045 | | 1,295,291 | 1,341,796 | 13,452,336 | 14,794,132 | (6,225,002 | ) | 8,569,130 | | ||||||||||||||||||||||||||||||||||
Vista Montana Residential & Townhomes |
San Jose, CA | (F) | | 51,000,000 | | | | 51,000,000 | | 51,000,000 | | 51,000,000 | | |||||||||||||||||||||||||||||||||||
Vista on Courthouse |
Arlington, VA | 2008 | 220 | 15,550,260 | 69,449,740 | | 86,777 | 15,550,260 | 69,536,517 | 85,086,777 | (5,267,387 | ) | 79,819,390 | | ||||||||||||||||||||||||||||||||||
Waterford at Deerwood |
Jacksonville, FL | 1985 | 248 | 1,496,913 | 10,659,702 | | 3,584,784 | 1,496,913 | 14,244,486 | 15,741,399 | (6,711,046 | ) | 9,030,353 | | ||||||||||||||||||||||||||||||||||
Waterford at Orange Park |
Orange Park, FL | 1986 | 280 | 1,960,000 | 12,098,784 | | 2,967,016 | 1,960,000 | 15,065,800 | 17,025,800 | (7,417,680 | ) | 9,608,120 | | ||||||||||||||||||||||||||||||||||
Waterford Place (CO) |
Thornton, CO | 1998 | 336 | 5,040,000 | 29,946,419 | | 1,310,833 | 5,040,000 | 31,257,252 | 36,297,252 | (9,793,049 | ) | 26,504,203 | | ||||||||||||||||||||||||||||||||||
Waterside |
Reston, VA | 1984 | 276 | 20,700,000 | 27,474,388 | | 7,638,031 | 20,700,000 | 35,112,419 | 55,812,419 | (9,030,796 | ) | 46,781,623 | | ||||||||||||||||||||||||||||||||||
Webster Green |
Needham, MA | 1985 | 77 | 1,418,893 | 9,485,006 | | 1,000,811 | 1,418,893 | 10,485,817 | 11,904,710 | (3,879,487 | ) | 8,025,223 | | ||||||||||||||||||||||||||||||||||
Welleby Lake Club |
Sunrise, FL | 1991 | 304 | 3,648,000 | 17,620,879 | | 3,744,103 | 3,648,000 | 21,364,982 | 25,012,982 | (9,435,056 | ) | 15,577,926 | | ||||||||||||||||||||||||||||||||||
West End Apartments (fka Emerson Place/CRP II) |
Boston, MA (G) | 2008 | 310 | 469,546 | 163,123,022 | | 358,369 | 469,546 | 163,481,391 | 163,950,937 | (15,522,448 | ) | 148,428,489 | | ||||||||||||||||||||||||||||||||||
Westerly at Worldgate |
Herndon, VA | 1995 | 320 | 14,568,000 | 43,620,057 | | 1,062,632 | 14,568,000 | 44,682,689 | 59,250,689 | (6,046,012 | ) | 53,204,677 | | ||||||||||||||||||||||||||||||||||
Westfield Village |
Centerville, VA | 1988 | 228 | 7,000,000 | 23,245,834 | | 4,574,728 | 7,000,000 | 27,820,562 | 34,820,562 | (8,289,817 | ) | 26,530,745 | | ||||||||||||||||||||||||||||||||||
Westridge |
Tacoma, WA | 1987 -1991 | 714 | 3,501,900 | 31,506,082 | | 6,551,697 | 3,501,900 | 38,057,779 | 41,559,679 | (19,228,990 | ) | 22,330,689 | | ||||||||||||||||||||||||||||||||||
Westgate Pasadena Condos |
Pasadena, CA | (F) | | 29,977,725 | 16,130,079 | | | 29,977,725 | 16,130,079 | 46,107,804 | | 46,107,804 | | |||||||||||||||||||||||||||||||||||
Westgate Pasadena and Green |
Pasadena, CA | (F) | | | 390,813 | | | | 390,813 | 390,813 | | 390,813 | | |||||||||||||||||||||||||||||||||||
Westside Villas I |
Los Angeles, CA | 1999 | 21 | 1,785,000 | 3,233,254 | | 256,198 | 1,785,000 | 3,489,452 | 5,274,452 | (1,324,557 | ) | 3,949,895 | | ||||||||||||||||||||||||||||||||||
Westside Villas II |
Los Angeles, CA | 1999 | 23 | 1,955,000 | 3,541,435 | | 139,793 | 1,955,000 | 3,681,228 | 5,636,228 | (1,307,577 | ) | 4,328,651 | | ||||||||||||||||||||||||||||||||||
Westside Villas III |
Los Angeles, CA | 1999 | 36 | 3,060,000 | 5,538,871 | | 203,576 | 3,060,000 | 5,742,447 | 8,802,447 | (2,045,237 | ) | 6,757,210 | | ||||||||||||||||||||||||||||||||||
Westside Villas IV |
Los Angeles, CA | 1999 | 36 | 3,060,000 | 5,539,390 | | 212,024 | 3,060,000 | 5,751,414 | 8,811,414 | (2,039,061 | ) | 6,772,353 | | ||||||||||||||||||||||||||||||||||
Westside Villas V |
Los Angeles, CA | 1999 | 60 | 5,100,000 | 9,224,485 | | 368,292 | 5,100,000 | 9,592,777 | 14,692,777 | (3,414,998 | ) | 11,277,779 | | ||||||||||||||||||||||||||||||||||
Westside Villas VI |
Los Angeles, CA | 1989 | 18 | 1,530,000 | 3,023,523 | | 231,964 | 1,530,000 | 3,255,487 | 4,785,487 | (1,182,625 | ) | 3,602,862 | | ||||||||||||||||||||||||||||||||||
Westside Villas VII |
Los Angeles, CA | 2001 | 53 | 4,505,000 | 10,758,900 | | 361,135 | 4,505,000 | 11,120,035 | 15,625,035 | (3,377,984 | ) | 12,247,051 | | ||||||||||||||||||||||||||||||||||
Wimberly at Deerwood |
Jacksonville, FL | 2000 | 322 | 8,000,000 | 30,057,214 | | 1,524,972 | 8,000,000 | 31,582,186 | 39,582,186 | (7,060,939 | ) | 32,521,247 | | ||||||||||||||||||||||||||||||||||
Winchester Park |
Riverside, RI | 1972 | 416 | 2,822,618 | 18,868,626 | | 6,221,418 | 2,822,618 | 25,090,044 | 27,912,662 | (10,446,769 | ) | 17,465,893 | | ||||||||||||||||||||||||||||||||||
Winchester Wood |
Riverside, RI | 1989 | 62 | 683,215 | 4,567,154 | | 798,960 | 683,215 | 5,366,114 | 6,049,329 | (2,013,478 | ) | 4,035,851 | | ||||||||||||||||||||||||||||||||||
Windsor at Fair Lakes |
Fairfax, VA | 1988 | 250 | 10,000,000 | 28,587,109 | | 5,870,235 | 10,000,000 | 34,457,344 | 44,457,344 | (9,463,894 | ) | 34,993,450 | |
S-7
Table of Contents
ERP OPERATING LIMITED PARTNERSHIP
Schedule III Real Estate and Accumulated Depreciation
December 31, 2010
Schedule III Real Estate and Accumulated Depreciation
December 31, 2010
Cost Capitalized | ||||||||||||||||||||||||||||||||||||||||||||||||
Subsequent to | Gross Amount Carried | |||||||||||||||||||||||||||||||||||||||||||||||
Initial Cost to | Acquisition | at Close of | ||||||||||||||||||||||||||||||||||||||||||||||
Description | Company | (Improvements, net) (E) | Period 12/31/10 | |||||||||||||||||||||||||||||||||||||||||||||
Date of | Building & | Building & | Building & | Accumulated | Investment in Real | |||||||||||||||||||||||||||||||||||||||||||
Apartment Name | Location | Construction | Units (H) | Land | Fixtures | Land | Fixtures | Land | Fixtures (A) | Total (B) | Depreciation (C) | Estate, Net at 12/31/10 (B) | Encumbrances | |||||||||||||||||||||||||||||||||||
Winston, The (FL) |
Pembroke Pines, FL | 2001/2003 | 464 | 18,561,000 | 49,527,569 | | 1,617,923 | 18,561,000 | 51,145,492 | 69,706,492 | (8,441,759 | ) | 61,264,733 | | ||||||||||||||||||||||||||||||||||
Wood Creek (CA) |
Pleasant Hill, CA | 1987 | 256 | 9,729,900 | 23,009,768 | | 4,472,213 | 9,729,900 | 27,481,981 | 37,211,881 | (12,645,672 | ) | 24,566,209 | | ||||||||||||||||||||||||||||||||||
Woodbridge (CT) |
Newington, CT | 1968 | 73 | 498,377 | 3,331,548 | | 862,784 | 498,377 | 4,194,332 | 4,692,709 | (1,635,504 | ) | 3,057,205 | | ||||||||||||||||||||||||||||||||||
Woodleaf |
Campbell, CA | 1984 | 178 | 8,550,600 | 16,988,183 | | 1,418,889 | 8,550,600 | 18,407,072 | 26,957,672 | (8,148,131 | ) | 18,809,541 | | ||||||||||||||||||||||||||||||||||
Woodside |
Lorton, VA | 1987 | 252 | 1,326,000 | 12,510,903 | | 5,846,332 | 1,326,000 | 18,357,235 | 19,683,235 | (10,821,201 | ) | 8,862,034 | | ||||||||||||||||||||||||||||||||||
Management Business |
Chicago, IL | (D) | | | | | 79,865,530 | | 79,865,530 | 79,865,530 | (61,109,987 | ) | 18,755,543 | | ||||||||||||||||||||||||||||||||||
Operating Partnership |
Chicago, IL | (F) | | | 804,852 | | | | 804,852 | 804,852 | | 804,852 | | |||||||||||||||||||||||||||||||||||
ERPOP Wholly Owned Unencumbered |
80,239 | 2,929,343,369 | 8,675,464,206 | | 950,595,062 | 2,929,343,369 | 9,626,059,268 | 12,555,402,637 | (2,847,912,228 | ) | 9,707,490,409 | | ||||||||||||||||||||||||||||||||||||
ERPOP Wholly Owned Encumbered: |
||||||||||||||||||||||||||||||||||||||||||||||||
929 House |
Cambridge, MA (G) | 1975 | 127 | 3,252,993 | 21,745,595 | | 4,361,591 | 3,252,993 | 26,107,186 | 29,360,179 | (9,147,568 | ) | 20,212,611 | 3,059,026 | ||||||||||||||||||||||||||||||||||
Academy Village |
North Hollywood, CA | 1989 | 248 | 25,000,000 | 23,593,194 | | 5,642,404 | 25,000,000 | 29,235,598 | 54,235,598 | (8,614,636 | ) | 45,620,962 | 20,000,000 | ||||||||||||||||||||||||||||||||||
Acappella |
Pasadena, CA | 2002 | 143 | 5,839,548 | 29,360,452 | | | 5,839,548 | 29,360,452 | 35,200,000 | | 35,200,000 | 20,886,508 | |||||||||||||||||||||||||||||||||||
Acton Courtyard |
Berkeley, CA (G) | 2003 | 71 | 5,550,000 | 15,785,509 | | 58,895 | 5,550,000 | 15,844,404 | 21,394,404 | (2,806,816 | ) | 18,587,588 | 9,920,000 | ||||||||||||||||||||||||||||||||||
Alborada |
Fremont, CA | 1999 | 442 | 24,310,000 | 59,214,129 | | 2,251,542 | 24,310,000 | 61,465,671 | 85,775,671 | (23,124,504 | ) | 62,651,167 | (J | ) | |||||||||||||||||||||||||||||||||
Alexander on Ponce |
Atlanta, GA | 2003 | 330 | 9,900,000 | 35,819,022 | | 1,541,765 | 9,900,000 | 37,360,787 | 47,260,787 | (8,232,441 | ) | 39,028,346 | 28,880,000 | ||||||||||||||||||||||||||||||||||
Amberton |
Manassas, VA | 1986 | 190 | 900,600 | 11,921,815 | | 2,406,495 | 900,600 | 14,328,310 | 15,228,910 | (7,347,971 | ) | 7,880,939 | 10,705,000 | ||||||||||||||||||||||||||||||||||
Arbor Terrace |
Sunnyvale, CA | 1979 | 175 | 9,057,300 | 18,483,642 | | 2,226,056 | 9,057,300 | 20,709,698 | 29,766,998 | (9,184,819 | ) | 20,582,179 | (L | ) | |||||||||||||||||||||||||||||||||
Arboretum (MA) |
Canton, MA | 1989 | 156 | 4,685,900 | 10,992,751 | | 1,798,509 | 4,685,900 | 12,791,260 | 17,477,160 | (6,000,939 | ) | 11,476,221 | (I | ) | |||||||||||||||||||||||||||||||||
Artech Building |
Berkeley, CA (G) | 2002 | 21 | 1,642,000 | 9,152,518 | | 85,975 | 1,642,000 | 9,238,493 | 10,880,493 | (1,437,190 | ) | 9,443,303 | 3,200,000 | ||||||||||||||||||||||||||||||||||
Artisan Square |
Northridge, CA | 2002 | 140 | 7,000,000 | 20,537,359 | | 687,091 | 7,000,000 | 21,224,450 | 28,224,450 | (6,239,094 | ) | 21,985,356 | 22,779,715 | ||||||||||||||||||||||||||||||||||
Avanti |
Anaheim, CA | 1987 | 162 | 12,960,000 | 18,497,683 | | 1,018,387 | 12,960,000 | 19,516,070 | 32,476,070 | (4,132,155 | ) | 28,343,915 | 19,850,000 | ||||||||||||||||||||||||||||||||||
Bachenheimer Building |
Berkeley, CA (G) | 2004 | 44 | 3,439,000 | 13,866,379 | | 42,240 | 3,439,000 | 13,908,619 | 17,347,619 | (2,287,866 | ) | 15,059,753 | 8,585,000 | ||||||||||||||||||||||||||||||||||
Bella Vista Apartments at Boca Del Mar |
Boca Raton, FL | 1985 | 392 | 11,760,000 | 20,190,252 | | 13,328,327 | 11,760,000 | 33,518,579 | 45,278,579 | (13,414,974 | ) | 31,863,605 | 26,134,010 | ||||||||||||||||||||||||||||||||||
Bellagio Apartment Homes |
Scottsdale, AZ | 1995 | 202 | 2,626,000 | 16,025,041 | | 953,738 | 2,626,000 | 16,978,779 | 19,604,779 | (4,541,961 | ) | 15,062,818 | (L | ) | |||||||||||||||||||||||||||||||||
Berkeleyan |
Berkeley, CA (G) | 1998 | 56 | 4,377,000 | 16,022,110 | | 264,145 | 4,377,000 | 16,286,255 | 20,663,255 | (2,735,637 | ) | 17,927,618 | 8,290,000 | ||||||||||||||||||||||||||||||||||
Bradley Park |
Puyallup, WA | 1999 | 155 | 3,813,000 | 18,313,645 | | 388,646 | 3,813,000 | 18,702,291 | 22,515,291 | (4,995,318 | ) | 17,519,973 | 11,143,586 | ||||||||||||||||||||||||||||||||||
Briarwood (CA) |
Sunnyvale, CA | 1985 | 192 | 9,991,500 | 22,247,278 | | 1,434,998 | 9,991,500 | 23,682,276 | 33,673,776 | (10,266,159 | ) | 23,407,617 | 12,800,000 | ||||||||||||||||||||||||||||||||||
Brookside (CO) |
Boulder, CO | 1993 | 144 | 3,600,400 | 10,211,159 | | 1,520,927 | 3,600,400 | 11,732,086 | 15,332,486 | (5,075,082 | ) | 10,257,404 | (L | ) | |||||||||||||||||||||||||||||||||
Canterbury |
Germantown, MD (I) | 1986 | 544 | 2,781,300 | 32,942,531 | | 13,914,331 | 2,781,300 | 46,856,862 | 49,638,162 | (24,687,359 | ) | 24,950,803 | 31,680,000 | ||||||||||||||||||||||||||||||||||
Cape House I |
Jacksonville, FL | 1998 | 240 | 4,800,000 | 22,484,240 | | 426,982 | 4,800,000 | 22,911,222 | 27,711,222 | (4,507,742 | ) | 23,203,480 | 13,748,202 | ||||||||||||||||||||||||||||||||||
Cape House II |
Jacksonville, FL | 1998 | 240 | 4,800,000 | 22,229,836 | | 1,689,141 | 4,800,000 | 23,918,977 | 28,718,977 | (4,773,188 | ) | 23,945,789 | 13,302,929 | ||||||||||||||||||||||||||||||||||
Carmel Terrace |
San Diego, CA | 1988-1989 | 384 | 2,288,300 | 20,596,281 | | 9,979,210 | 2,288,300 | 30,575,491 | 32,863,791 | (16,480,043 | ) | 16,383,748 | (K | ) | |||||||||||||||||||||||||||||||||
Cascade at Landmark |
Alexandria, VA | 1990 | 277 | 3,603,400 | 19,657,554 | | 6,814,326 | 3,603,400 | 26,471,880 | 30,075,280 | (12,856,433 | ) | 17,218,847 | 31,921,089 | ||||||||||||||||||||||||||||||||||
Centennial Court |
Seattle, WA (G) | 2001 | 187 | 3,800,000 | 21,280,039 | | 362,829 | 3,800,000 | 21,642,868 | 25,442,868 | (5,029,405 | ) | 20,413,463 | 15,557,428 | ||||||||||||||||||||||||||||||||||
Centennial Tower |
Seattle, WA (G) | 1991 | 221 | 5,900,000 | 48,800,339 | | 2,046,434 | 5,900,000 | 50,846,773 | 56,746,773 | (11,438,821 | ) | 45,307,952 | 25,300,790 | ||||||||||||||||||||||||||||||||||
Chelsea Square |
Redmond, WA | 1991 | 113 | 3,397,100 | 9,289,074 | | 1,388,566 | 3,397,100 | 10,677,640 | 14,074,740 | (4,562,296 | ) | 9,512,444 | (L | ) | |||||||||||||||||||||||||||||||||
Church Corner |
Cambridge, MA (G) | 1987 | 85 | 5,220,000 | 16,744,643 | | 1,179,544 | 5,220,000 | 17,924,187 | 23,144,187 | (4,248,578 | ) | 18,895,609 | 12,000,000 | ||||||||||||||||||||||||||||||||||
Cierra Crest |
Denver, CO | 1996 | 480 | 4,803,100 | 34,894,898 | | 4,402,011 | 4,803,100 | 39,296,909 | 44,100,009 | (18,210,852 | ) | 25,889,157 | (L | ) | |||||||||||||||||||||||||||||||||
City Pointe |
Fullerton, CA (G) | 2004 | 183 | 6,863,792 | 36,476,207 | | 83,706 | 6,863,792 | 36,559,913 | 43,423,705 | (2,707,002 | ) | 40,716,703 | 23,503,206 | ||||||||||||||||||||||||||||||||||
Colorado Pointe |
Denver, CO | 2006 | 193 | 5,790,000 | 28,815,766 | | 408,628 | 5,790,000 | 29,224,394 | 35,014,394 | (6,452,888 | ) | 28,561,506 | (K | ) | |||||||||||||||||||||||||||||||||
Conway Court |
Roslindale, MA | 1920 | 28 | 101,451 | 710,524 | | 229,420 | 101,451 | 939,944 | 1,041,395 | (395,244 | ) | 646,151 | 260,117 | ||||||||||||||||||||||||||||||||||
Copper Canyon |
Highlands Ranch, CO | 1999 | 222 | 1,442,212 | 16,251,114 | | 1,150,650 | 1,442,212 | 17,401,764 | 18,843,976 | (7,322,122 | ) | 11,521,854 | (K | ) | |||||||||||||||||||||||||||||||||
Country Brook |
Chandler, AZ | 1986-1996 | 396 | 1,505,219 | 29,542,535 | | 3,653,889 | 1,505,219 | 33,196,424 | 34,701,643 | (15,485,956 | ) | 19,215,687 | (K | ) | |||||||||||||||||||||||||||||||||
Country Club Lakes |
Jacksonville, FL | 1997 | 555 | 15,000,000 | 41,055,786 | | 4,105,750 | 15,000,000 | 45,161,536 | 60,161,536 | (11,315,474 | ) | 48,846,062 | 32,097,598 | ||||||||||||||||||||||||||||||||||
Creekside (San Mateo) |
San Mateo, CA | 1985 | 192 | 9,606,600 | 21,193,232 | | 2,040,890 | 9,606,600 | 23,234,122 | 32,840,722 | (9,971,049 | ) | 22,869,673 | (L | ) | |||||||||||||||||||||||||||||||||
Crescent at Cherry Creek |
Denver, CO | 1994 | 216 | 2,594,000 | 15,149,470 | | 2,620,271 | 2,594,000 | 17,769,741 | 20,363,741 | (8,074,935 | ) | 12,288,806 | (K | ) | |||||||||||||||||||||||||||||||||
Deerwood (SD) |
San Diego, CA | 1990 | 316 | 2,082,095 | 18,739,815 | | 13,007,845 | 2,082,095 | 31,747,660 | 33,829,755 | (17,756,307 | ) | 16,073,448 | (K | ) | |||||||||||||||||||||||||||||||||
Estates at Maitland Summit |
Orlando, FL | 1998 | 272 | 9,520,000 | 28,352,160 | | 678,371 | 9,520,000 | 29,030,531 | 38,550,531 | (7,308,841 | ) | 31,241,690 | (L | ) | |||||||||||||||||||||||||||||||||
Estates at Tanglewood |
Westminster, CO | 2003 | 504 | 7,560,000 | 51,256,538 | | 1,850,357 | 7,560,000 | 53,106,895 | 60,666,895 | (12,304,895 | ) | 48,362,000 | (J | ) | |||||||||||||||||||||||||||||||||
Fairfield |
Stamford, CT (G) | 1996 | 263 | 6,510,200 | 39,690,120 | | 5,118,992 | 6,510,200 | 44,809,112 | 51,319,312 | (19,894,444 | ) | 31,424,868 | 34,595,000 | ||||||||||||||||||||||||||||||||||
Fine Arts Building |
Berkeley, CA (G) | 2004 | 100 | 7,817,000 | 26,462,772 | | 58,091 | 7,817,000 | 26,520,863 | 34,337,863 | (4,506,280 | ) | 29,831,583 | 16,215,000 | ||||||||||||||||||||||||||||||||||
Gaia Building |
Berkeley, CA (G) | 2000 | 91 | 7,113,000 | 25,623,826 | | 117,077 | 7,113,000 | 25,740,903 | 32,853,903 | (4,345,971 | ) | 28,507,932 | 14,630,000 | ||||||||||||||||||||||||||||||||||
Gateway at Malden Center |
Malden, MA (G) | 1988 | 203 | 9,209,780 | 25,722,666 | | 7,947,656 | 9,209,780 | 33,670,322 | 42,880,102 | (10,662,848 | ) | 32,217,254 | 14,970,000 | ||||||||||||||||||||||||||||||||||
Geary Court Yard |
San Francisco, CA | 1990 | 164 | 1,722,400 | 15,471,429 | | 2,040,242 | 1,722,400 | 17,511,671 | 19,234,071 | (8,300,938 | ) | 10,933,133 | 18,893,440 | ||||||||||||||||||||||||||||||||||
Glen Meadow |
Franklin, MA | 1971 | 288 | 2,339,330 | 16,133,588 | | 3,534,410 | 2,339,330 | 19,667,998 | 22,007,328 | (8,107,522 | ) | 13,899,806 | 619,538 | ||||||||||||||||||||||||||||||||||
Grandeville at River Place |
Oviedo, FL | 2002 | 280 | 6,000,000 | 23,114,693 | | 1,520,490 | 6,000,000 | 24,635,183 | 30,635,183 | (6,872,649 | ) | 23,762,534 | 28,890,000 | ||||||||||||||||||||||||||||||||||
Greenhaven |
Union City, CA | 1983 | 250 | 7,507,000 | 15,210,399 | | 2,970,066 | 7,507,000 | 18,180,465 | 25,687,465 | (8,456,557 | ) | 17,230,908 | 10,975,000 | ||||||||||||||||||||||||||||||||||
Greenhouse Frey Road |
Kennesaw, GA | 1985 | 489 | 2,467,200 | 22,187,443 | | 4,922,373 | 2,467,200 | 27,109,816 | 29,577,016 | (16,164,084 | ) | 13,412,932 | 19,700,000 | ||||||||||||||||||||||||||||||||||
Greenwood Park |
Centennial, CO | 1994 | 291 | 4,365,000 | 38,372,440 | | 1,136,402 | 4,365,000 | 39,508,842 | 43,873,842 | (6,846,735 | ) | 37,027,107 | (L | ) | |||||||||||||||||||||||||||||||||
Greenwood Plaza |
Centennial, CO | 1996 | 266 | 3,990,000 | 35,846,708 | | 1,658,135 | 3,990,000 | 37,504,843 | 41,494,843 | (6,529,493 | ) | 34,965,350 | (L | ) | |||||||||||||||||||||||||||||||||
Harbor Steps |
Seattle, WA (G) | 2000 | 730 | 59,900,000 | 158,829,432 | | 5,787,753 | 59,900,000 | 164,617,185 | 224,517,185 | (34,944,472 | ) | 189,572,713 | 125,926,373 | ||||||||||||||||||||||||||||||||||
Hathaway |
Long Beach, CA | 1987 | 385 | 2,512,500 | 22,611,912 | | 6,365,675 | 2,512,500 | 28,977,587 | 31,490,087 | (15,770,720 | ) | 15,719,367 | 46,517,800 | ||||||||||||||||||||||||||||||||||
Heights on Capitol Hill |
Seattle, WA (G) | 2006 | 104 | 5,425,000 | 21,138,028 | | 55,704 | 5,425,000 | 21,193,732 | 26,618,732 | (3,965,879 | ) | 22,652,853 | 19,320,000 | ||||||||||||||||||||||||||||||||||
Heritage at Stone Ridge |
Burlington, MA | 2005 | 180 | 10,800,000 | 31,808,335 | | 607,280 | 10,800,000 | 32,415,615 | 43,215,615 | (7,307,875 | ) | 35,907,740 | 28,150,164 | ||||||||||||||||||||||||||||||||||
Heronfield |
Kirkland, WA | 1990 | 202 | 9,245,000 | 27,018,110 | | 1,212,853 | 9,245,000 | 28,230,963 | 37,475,963 | (5,306,819 | ) | 32,169,144 | (K | ) | |||||||||||||||||||||||||||||||||
Highlands at Cherry Hill |
Cherry Hills, NJ | 2002 | 170 | 6,800,000 | 21,459,108 | | 582,660 | 6,800,000 | 22,041,768 | 28,841,768 | (4,883,071 | ) | 23,958,697 | 14,947,792 | ||||||||||||||||||||||||||||||||||
Ivory Wood |
Bothell, WA | 2000 | 144 | 2,732,800 | 13,888,282 | | 543,271 | 2,732,800 | 14,431,553 | 17,164,353 | (3,798,957 | ) | 13,365,396 | 8,020,000 | ||||||||||||||||||||||||||||||||||
Jaclen Towers |
Beverly, MA | 1976 | 100 | 437,072 | 2,921,735 | | 1,125,390 | 437,072 | 4,047,125 | 4,484,197 | (1,826,858 | ) | 2,657,339 | 1,208,416 | ||||||||||||||||||||||||||||||||||
Kelvin Court (fka Alta Pacific) |
Irvine, CA | 2008 | 132 | 10,752,145 | 34,628,114 | | 11,381 | 10,752,145 | 34,639,495 | 45,391,640 | (3,455,525 | ) | 41,936,115 | 28,260,000 | ||||||||||||||||||||||||||||||||||
La Terrazza at Colma Station |
Colma, CA (G) | 2005 | 153 | | 41,251,043 | | 458,671 | | 41,709,714 | 41,709,714 | (6,759,707 | ) | 34,950,007 | 25,940,000 | ||||||||||||||||||||||||||||||||||
LaSalle |
Beaverton, OR (G) | 1998 | 554 | 7,202,000 | 35,877,612 | | 2,584,539 | 7,202,000 | 38,462,151 | 45,664,151 | (12,221,817 | ) | 33,442,334 | 28,342,496 | ||||||||||||||||||||||||||||||||||
Liberty Park |
Brain Tree, MA | 2000 | 202 | 5,977,504 | 26,749,111 | | 1,935,923 | 5,977,504 | 28,685,034 | 34,662,538 | (8,587,844 | ) | 26,074,694 | 24,980,280 | ||||||||||||||||||||||||||||||||||
Liberty Tower |
Arlington, VA (G) | 2008 | 235 | 16,382,822 | 83,817,078 | | 98,458 | 16,382,822 | 83,915,536 | 100,298,358 | (2,774,628 | ) | 97,523,730 | 49,160,870 |
S-8
Table of Contents
ERP OPERATING LIMITED PARTNERSHIP
Schedule III Real Estate and Accumulated Depreciation
December 31, 2010
Schedule III Real Estate and Accumulated Depreciation
December 31, 2010
Cost Capitalized | ||||||||||||||||||||||||||||||||||||||||||||||||
Subsequent to | Gross Amount Carried | |||||||||||||||||||||||||||||||||||||||||||||||
Initial Cost to | Acquisition | at Close of | ||||||||||||||||||||||||||||||||||||||||||||||
Description | Company | (Improvements, net) (E) | Period 12/31/10 | |||||||||||||||||||||||||||||||||||||||||||||
Date of | Building & | Building & | Building & | Accumulated | Investment in Real | |||||||||||||||||||||||||||||||||||||||||||
Apartment Name | Location | Construction | Units (H) | Land | Fixtures | Land | Fixtures | Land | Fixtures (A) | Total (B) | Depreciation (C) | Estate, Net at 12/31/10 (B) | Encumbrances | |||||||||||||||||||||||||||||||||||
Lincoln Heights |
Quincy, MA | 1991 | 336 | 5,928,400 | 33,595,262 | | 10,549,292 | 5,928,400 | 44,144,554 | 50,072,954 | (19,375,802 | ) | 30,697,152 | (L | ) | |||||||||||||||||||||||||||||||||
Longview Place |
Waltham, MA | 2004 | 348 | 20,880,000 | 90,255,509 | | 1,460,656 | 20,880,000 | 91,716,165 | 112,596,165 | (18,368,568 | ) | 94,227,597 | 57,029,000 | ||||||||||||||||||||||||||||||||||
Market Street Village |
San Diego, CA | 2006 | 229 | 13,740,000 | 40,757,300 | | 345,628 | 13,740,000 | 41,102,928 | 54,842,928 | (7,630,442 | ) | 47,212,486 | (K | ) | |||||||||||||||||||||||||||||||||
Marks |
Englewood, CO (G) | 1987 | 616 | 4,928,500 | 44,622,314 | | 8,060,048 | 4,928,500 | 52,682,362 | 57,610,862 | (24,944,534 | ) | 32,666,328 | 19,195,000 | ||||||||||||||||||||||||||||||||||
Metro on First |
Seattle, WA (G) | 2002 | 102 | 8,540,000 | 12,209,981 | | 254,915 | 8,540,000 | 12,464,896 | 21,004,896 | (2,757,191 | ) | 18,247,705 | 16,650,000 | ||||||||||||||||||||||||||||||||||
Mill Creek |
Milpitas, CA | 1991 | 516 | 12,858,693 | 57,168,503 | | 2,403,984 | 12,858,693 | 59,572,487 | 72,431,180 | (17,116,835 | ) | 55,314,345 | 69,312,259 | ||||||||||||||||||||||||||||||||||
Miramar Lakes |
Miramar, FL | 2003 | 344 | 17,200,000 | 51,487,235 | | 1,343,639 | 17,200,000 | 52,830,874 | 70,030,874 | (11,391,642 | ) | 58,639,232 | (M | ) | |||||||||||||||||||||||||||||||||
Missions at Sunbow |
Chula Vista, CA | 2003 | 336 | 28,560,000 | 59,287,595 | | 1,148,849 | 28,560,000 | 60,436,444 | 88,996,444 | (14,871,085 | ) | 74,125,359 | 55,091,000 | ||||||||||||||||||||||||||||||||||
Monte Viejo |
Phoneix, AZ | 2004 | 480 | 12,700,000 | 45,926,784 | | 976,950 | 12,700,000 | 46,903,734 | 59,603,734 | (11,299,701 | ) | 48,304,033 | 40,960,036 | ||||||||||||||||||||||||||||||||||
Montecito |
Valencia, CA | 1999 | 210 | 8,400,000 | 24,709,146 | | 1,732,020 | 8,400,000 | 26,441,166 | 34,841,166 | (9,562,693 | ) | 25,278,473 | (K | ) | |||||||||||||||||||||||||||||||||
Montierra |
Scottsdale, AZ | 1999 | 249 | 3,455,000 | 17,266,787 | | 1,458,706 | 3,455,000 | 18,725,493 | 22,180,493 | (7,870,337 | ) | 14,310,156 | 17,858,854 | ||||||||||||||||||||||||||||||||||
Montierra (CA) |
San Diego, CA | 1990 | 272 | 8,160,000 | 29,360,938 | | 6,457,847 | 8,160,000 | 35,818,785 | 43,978,785 | (13,974,022 | ) | 30,004,763 | (K | ) | |||||||||||||||||||||||||||||||||
Mosaic at Metro |
Hyattsville, MD | 2008 | 260 | | 59,653,038 | | 49,368 | | 59,702,406 | 59,702,406 | (4,118,730 | ) | 55,583,676 | 45,046,469 | ||||||||||||||||||||||||||||||||||
Mountain Park Ranch |
Phoenix, AZ | 1994 | 240 | 1,662,332 | 18,260,276 | | 1,748,558 | 1,662,332 | 20,008,834 | 21,671,166 | (9,432,301 | ) | 12,238,865 | (J | ) | |||||||||||||||||||||||||||||||||
Mountain Terrace |
Stevenson Ranch, CA | 1992 | 510 | 3,966,500 | 35,814,995 | | 11,502,806 | 3,966,500 | 47,317,801 | 51,284,301 | (21,425,003 | ) | 29,859,298 | 57,428,472 | ||||||||||||||||||||||||||||||||||
Northpark |
Burlingame, CA | 1972 | 510 | 38,607,000 | 77,493,000 | | 39,582 | 38,607,000 | 77,532,582 | 116,139,582 | (3,084,091 | ) | 113,055,491 | 70,668,409 | ||||||||||||||||||||||||||||||||||
North Pier at Harborside |
Jersey City, NJ (J) | 2003 | 297 | 4,000,159 | 94,348,092 | | 1,739,535 | 4,000,159 | 96,087,627 | 100,087,786 | (22,321,947 | ) | 77,765,839 | 76,862,000 | ||||||||||||||||||||||||||||||||||
Oak Mill I |
Germantown, MD | 1984 | 208 | 10,000,000 | 13,155,522 | | 7,235,088 | 10,000,000 | 20,390,610 | 30,390,610 | (6,289,524 | ) | 24,101,086 | 12,487,301 | ||||||||||||||||||||||||||||||||||
Oak Mill II |
Germantown, MD | 1985 | 192 | 854,133 | 10,233,947 | | 5,864,959 | 854,133 | 16,098,906 | 16,953,039 | (8,498,045 | ) | 8,454,994 | 9,600,000 | ||||||||||||||||||||||||||||||||||
Oaks |
Santa Clarita, CA | 2000 | 520 | 23,400,000 | 61,020,438 | | 2,652,544 | 23,400,000 | 63,672,982 | 87,072,982 | (17,959,221 | ) | 69,113,761 | 41,154,036 | ||||||||||||||||||||||||||||||||||
Olde Redmond Place |
Redmond, WA | 1986 | 192 | 4,807,100 | 14,126,038 | | 4,122,122 | 4,807,100 | 18,248,160 | 23,055,260 | (8,527,802 | ) | 14,527,458 | (L | ) | |||||||||||||||||||||||||||||||||
Parc East Towers |
New York, NY (G) | 1977 | 324 | 102,163,000 | 109,013,628 | | 5,654,774 | 102,163,000 | 114,668,402 | 216,831,402 | (18,284,019 | ) | 198,547,383 | 17,473,846 | ||||||||||||||||||||||||||||||||||
Park Meadow |
Gilbert, AZ | 1986 | 225 | 835,217 | 15,120,769 | | 2,267,564 | 835,217 | 17,388,333 | 18,223,550 | (8,395,148 | ) | 9,828,402 | (L | ) | |||||||||||||||||||||||||||||||||
Parkfield |
Denver, CO | 2000 | 476 | 8,330,000 | 28,667,618 | | 2,155,451 | 8,330,000 | 30,823,069 | 39,153,069 | (11,251,895 | ) | 27,901,174 | 23,275,000 | ||||||||||||||||||||||||||||||||||
Promenade at Peachtree |
Chamblee, GA | 2001 | 406 | 10,150,000 | 31,219,739 | | 1,645,577 | 10,150,000 | 32,865,316 | 43,015,316 | (8,729,820 | ) | 34,285,496 | (K | ) | |||||||||||||||||||||||||||||||||
Promenade at Town Center II |
Valencia, CA | 2001 | 270 | 13,500,000 | 34,405,636 | | 391,668 | 13,500,000 | 34,797,304 | 48,297,304 | (9,307,693 | ) | 38,989,611 | 32,785,701 | ||||||||||||||||||||||||||||||||||
Providence |
Bothell, WA | 2000 | 200 | 3,573,621 | 19,055,505 | | 541,320 | 3,573,621 | 19,596,825 | 23,170,446 | (5,354,911 | ) | 17,815,535 | (J | ) | |||||||||||||||||||||||||||||||||
Reserve at Clarendon Centre, The |
Arlington, VA (G) | 2003 | 252 | 10,500,000 | 52,812,935 | | 1,777,312 | 10,500,000 | 54,590,247 | 65,090,247 | (14,249,748 | ) | 50,840,499 | (K | ) | |||||||||||||||||||||||||||||||||
Reserve at Eisenhower, The |
Alexandria, VA | 2002 | 226 | 6,500,000 | 34,585,060 | | 702,144 | 6,500,000 | 35,287,204 | 41,787,204 | (10,058,015 | ) | 31,729,189 | (K | ) | |||||||||||||||||||||||||||||||||
Reserve at Empire Lakes |
Rancho Cucamonga, CA | 2005 | 467 | 16,345,000 | 73,080,670 | | 1,396,394 | 16,345,000 | 74,477,064 | 90,822,064 | (15,486,334 | ) | 75,335,730 | (J | ) | |||||||||||||||||||||||||||||||||
Reserve at Fairfax Corners |
Fairfax, VA | 2001 | 652 | 15,804,057 | 63,129,051 | | 2,563,175 | 15,804,057 | 65,692,226 | 81,496,283 | (19,948,034 | ) | 61,548,249 | 84,778,876 | ||||||||||||||||||||||||||||||||||
Reserve at Potomac Yard |
Alexandria, VA | 2002 | 588 | 11,918,917 | 68,976,484 | | 3,376,272 | 11,918,917 | 72,352,756 | 84,271,673 | (17,772,440 | ) | 66,499,233 | 66,470,000 | ||||||||||||||||||||||||||||||||||
Reserve at Town Center (WA) |
Mill Creek, WA | 2001 | 389 | 10,369,400 | 41,172,081 | | 1,414,773 | 10,369,400 | 42,586,854 | 52,956,254 | (10,871,457 | ) | 42,084,797 | 29,160,000 | ||||||||||||||||||||||||||||||||||
Rianna II |
Seattle, WA (G) | 2002 | 78 | 2,161,840 | 14,433,614 | | 16,614 | 2,161,840 | 14,450,228 | 16,612,068 | (1,072,947 | ) | 15,539,121 | 10,499,494 | ||||||||||||||||||||||||||||||||||
Rockingham Glen |
West Roxbury, MA | 1974 | 143 | 1,124,217 | 7,515,160 | | 1,533,725 | 1,124,217 | 9,048,885 | 10,173,102 | (3,757,339 | ) | 6,415,763 | 1,440,865 | ||||||||||||||||||||||||||||||||||
Rolling Green (Amherst) |
Amherst, MA | 1970 | 204 | 1,340,702 | 8,962,317 | | 3,313,332 | 1,340,702 | 12,275,649 | 13,616,351 | (5,297,121 | ) | 8,319,230 | 2,217,176 | ||||||||||||||||||||||||||||||||||
Rolling Green (Milford) |
Milford, MA | 1970 | 304 | 2,012,350 | 13,452,150 | | 3,986,562 | 2,012,350 | 17,438,712 | 19,451,062 | (7,305,093 | ) | 12,145,969 | 4,645,763 | ||||||||||||||||||||||||||||||||||
San Marcos Apartments |
Scottsdale, AZ | 1995 | 320 | 20,000,000 | 31,261,609 | | 1,384,451 | 20,000,000 | 32,646,060 | 52,646,060 | (7,272,584 | ) | 45,373,476 | 32,900,000 | ||||||||||||||||||||||||||||||||||
Savannah Lakes |
Boynton Beach, FL | 1991 | 466 | 7,000,000 | 30,263,310 | | 4,429,051 | 7,000,000 | 34,692,361 | 41,692,361 | (11,606,796 | ) | 30,085,565 | 36,610,000 | ||||||||||||||||||||||||||||||||||
Savannah Midtown |
Atlanta, GA | 2000 | 322 | 7,209,873 | 29,433,507 | | 2,603,453 | 7,209,873 | 32,036,960 | 39,246,833 | (8,514,514 | ) | 30,732,319 | 17,800,000 | ||||||||||||||||||||||||||||||||||
Savoy I |
Aurora, CO | 2001 | 444 | 5,450,295 | 38,765,670 | | 1,964,604 | 5,450,295 | 40,730,274 | 46,180,569 | (11,009,808 | ) | 35,170,761 | (L | ) | |||||||||||||||||||||||||||||||||
Sheffield Court |
Arlington, VA | 1986 | 597 | 3,342,381 | 31,337,332 | | 7,927,865 | 3,342,381 | 39,265,197 | 42,607,578 | (21,583,314 | ) | 21,024,264 | (L | ) | |||||||||||||||||||||||||||||||||
Sonata at Cherry Creek |
Denver, CO | 1999 | 183 | 5,490,000 | 18,130,479 | | 1,162,983 | 5,490,000 | 19,293,462 | 24,783,462 | (6,957,885 | ) | 17,825,577 | 19,190,000 | ||||||||||||||||||||||||||||||||||
Sonterra at Foothill Ranch |
Foothill Ranch, CA | 1997 | 300 | 7,503,400 | 24,048,507 | | 1,500,506 | 7,503,400 | 25,549,013 | 33,052,413 | (11,490,634 | ) | 21,561,779 | (L | ) | |||||||||||||||||||||||||||||||||
South Winds |
Fall River, MA | 1971 | 404 | 2,481,821 | 16,780,359 | | 3,712,343 | 2,481,821 | 20,492,702 | 22,974,523 | (8,697,220 | ) | 14,277,303 | 4,437,567 | ||||||||||||||||||||||||||||||||||
Springs Colony |
Altamonte Springs, FL | 1986 | 188 | 630,411 | 5,852,157 | | 2,363,300 | 630,411 | 8,215,457 | 8,845,868 | (5,129,095 | ) | 3,716,773 | (I | ) | |||||||||||||||||||||||||||||||||
Stonegate (CO) |
Broomfield, CO | 2003 | 350 | 8,750,000 | 32,998,775 | | 2,700,719 | 8,750,000 | 35,699,494 | 44,449,494 | (8,900,049 | ) | 35,549,445 | (J | ) | |||||||||||||||||||||||||||||||||
Stoneleigh at Deerfield |
Alpharetta, GA | 2003 | 370 | 4,810,000 | 29,999,596 | | 871,524 | 4,810,000 | 30,871,120 | 35,681,120 | (7,656,545 | ) | 28,024,575 | 16,800,000 | ||||||||||||||||||||||||||||||||||
Stoney Ridge |
Dale City, VA | 1985 | 264 | 8,000,000 | 24,147,091 | | 5,287,141 | 8,000,000 | 29,434,232 | 37,434,232 | (7,934,618 | ) | 29,499,614 | 15,138,399 | ||||||||||||||||||||||||||||||||||
Stonybrook |
Boynton Beach, FL | 2001 | 264 | 10,500,000 | 24,967,638 | | 951,679 | 10,500,000 | 25,919,317 | 36,419,317 | (6,210,078 | ) | 30,209,239 | 20,971,587 | ||||||||||||||||||||||||||||||||||
Summerhill Glen |
Maynard, MA | 1980 | 120 | 415,812 | 3,000,816 | | 766,088 | 415,812 | 3,766,904 | 4,182,716 | (1,622,076 | ) | 2,560,640 | 1,174,207 | ||||||||||||||||||||||||||||||||||
Summerset Village |
Chatsworth, CA | 1985 | 280 | 2,890,450 | 23,670,889 | | 3,797,264 | 2,890,450 | 27,468,153 | 30,358,603 | (13,674,820 | ) | 16,683,783 | 38,039,912 | ||||||||||||||||||||||||||||||||||
Sunforest |
Davie, FL | 1989 | 494 | 10,000,000 | 32,124,850 | | 4,030,481 | 10,000,000 | 36,155,331 | 46,155,331 | (11,194,003 | ) | 34,961,328 | (L | ) | |||||||||||||||||||||||||||||||||
Sunforest II |
Davie, FL | (F) | | | 337,751 | | | | 337,751 | 337,751 | | 337,751 | (L | ) | ||||||||||||||||||||||||||||||||||
Talleyrand |
Tarrytown, NY (I) | 1997-1998 | 300 | 12,000,000 | 49,838,160 | | 3,696,522 | 12,000,000 | 53,534,682 | 65,534,682 | (17,861,336 | ) | 47,673,346 | 35,000,000 | ||||||||||||||||||||||||||||||||||
Tanglewood (VA) |
Manassas, VA | 1987 | 432 | 2,108,295 | 24,619,495 | | 8,462,243 | 2,108,295 | 33,081,738 | 35,190,033 | (18,128,350 | ) | 17,061,683 | 25,110,000 | ||||||||||||||||||||||||||||||||||
Teresina |
Chula Vista, CA | 2000 | 440 | 28,600,000 | 61,916,670 | | 1,767,940 | 28,600,000 | 63,684,610 | 92,284,610 | (13,155,998 | ) | 79,128,612 | 44,095,588 | ||||||||||||||||||||||||||||||||||
Touriel Building |
Berkeley, CA (G) | 2004 | 35 | 2,736,000 | 7,810,027 | | 33,587 | 2,736,000 | 7,843,614 | 10,579,614 | (1,392,156 | ) | 9,187,458 | 5,050,000 | ||||||||||||||||||||||||||||||||||
Town Square at Mark Center I (fka Millbrook I) |
Alexandria, VA | 1996 | 406 | 24,360,000 | 86,178,714 | | 2,422,299 | 24,360,000 | 88,601,013 | 112,961,013 | (19,521,198 | ) | 93,439,815 | 64,680,000 | ||||||||||||||||||||||||||||||||||
Town Square at Mark Center Phase II |
Alexandria, VA | 2001 | 272 | 15,568,464 | 55,031,536 | | 34,830 | 15,568,464 | 55,066,366 | 70,634,830 | (1,956,133 | ) | 68,678,697 | 47,669,865 | ||||||||||||||||||||||||||||||||||
Tradition at Alafaya |
Oviedo, FL | 2006 | 253 | 7,590,000 | 31,881,505 | | 238,496 | 7,590,000 | 32,120,001 | 39,710,001 | (7,731,307 | ) | 31,978,694 | (K | ) | |||||||||||||||||||||||||||||||||
Tuscany at Lindbergh |
Atlanta, GA | 2001 | 324 | 9,720,000 | 40,874,023 | | 1,753,394 | 9,720,000 | 42,627,417 | 52,347,417 | (11,365,288 | ) | 40,982,129 | 32,360,000 | ||||||||||||||||||||||||||||||||||
Uptown Square |
Denver, CO (G) | 1999/2001 | 696 | 17,492,000 | 100,696,541 | | 2,232,071 | 17,492,000 | 102,928,612 | 120,420,612 | (24,014,273 | ) | 96,406,339 | 88,550,000 | ||||||||||||||||||||||||||||||||||
Versailles |
Woodland Hills, CA | 1991 | 253 | 12,650,000 | 33,656,292 | | 3,630,019 | 12,650,000 | 37,286,311 | 49,936,311 | (11,205,924 | ) | 38,730,387 | 30,372,953 | ||||||||||||||||||||||||||||||||||
Via Ventura |
Scottsdale, AZ | 1980 | 328 | 1,351,785 | 13,382,006 | | 7,962,802 | 1,351,785 | 21,344,808 | 22,696,593 | (14,368,306 | ) | 8,328,287 | (K | ) | |||||||||||||||||||||||||||||||||
Village at Lakewood |
Phoenix, AZ | 1988 | 240 | 3,166,411 | 13,859,090 | | 2,013,344 | 3,166,411 | 15,872,434 | 19,038,845 | (7,739,644 | ) | 11,299,201 | (L | ) | |||||||||||||||||||||||||||||||||
Vintage |
Ontario, CA | 2005-2007 | 300 | 7,059,230 | 47,677,762 | | 176,250 | 7,059,230 | 47,854,012 | 54,913,242 | (8,609,805 | ) | 46,303,437 | 33,000,000 | ||||||||||||||||||||||||||||||||||
Warwick Station |
Westminster, CO | 1986 | 332 | 2,274,121 | 21,113,974 | | 3,015,763 | 2,274,121 | 24,129,737 | 26,403,858 | (11,495,261 | ) | 14,908,597 | 8,355,000 | ||||||||||||||||||||||||||||||||||
Wellington Hill |
Manchester, NH | 1987 | 390 | 1,890,200 | 17,120,662 | | 7,628,748 | 1,890,200 | 24,749,410 | 26,639,610 | (15,003,057 | ) | 11,636,553 | (I | ) | |||||||||||||||||||||||||||||||||
Westgate Pasadena Apartments |
Pasadena, CA | 2010 | 480 | 22,898,848 | 131,986,739 | | (263 | ) | 22,898,848 | 131,986,476 | 154,885,324 | (185 | ) | 154,885,139 | 135,000,000 | |||||||||||||||||||||||||||||||||
Westwood Glen |
Westwood, MA | 1972 | 156 | 1,616,505 | 10,806,004 | | 1,495,929 | 1,616,505 | 12,301,933 | 13,918,438 | (4,379,593 | ) | 9,538,845 | 392,294 | ||||||||||||||||||||||||||||||||||
Whisper Creek |
Denver, CO | 2002 | 272 | 5,310,000 | 22,998,558 | | 843,388 | 5,310,000 | 23,841,946 | 29,151,946 | (6,016,094 | ) | 23,135,852 | 13,580,000 | ||||||||||||||||||||||||||||||||||
Wilkins Glen |
Medfield, MA | 1975 | 103 | 538,483 | 3,629,943 | | 1,484,323 | 538,483 | 5,114,266 | 5,652,749 | (2,071,249 | ) | 3,581,500 | 1,011,750 | ||||||||||||||||||||||||||||||||||
Windridge (CA) |
Laguna Niguel, CA | 1989 | 344 | 2,662,900 | 23,985,497 | | 5,111,877 | 2,662,900 | 29,097,374 | 31,760,274 | (16,423,796 | ) | 15,336,478 | (I | ) |
S-9
Table of Contents
ERP OPERATING LIMITED PARTNERSHIP
Schedule III Real Estate and Accumulated Depreciation
December 31, 2010
Schedule III Real Estate and Accumulated Depreciation
December 31, 2010
Cost Capitalized | ||||||||||||||||||||||||||||||||||||||||||||||||
Subsequent to | Gross Amount Carried | |||||||||||||||||||||||||||||||||||||||||||||||
Initial Cost to | Acquisition | at Close of | ||||||||||||||||||||||||||||||||||||||||||||||
Description | Company | (Improvements, net) (E) | Period 12/31/10 | |||||||||||||||||||||||||||||||||||||||||||||
Date of | Building & | Building & | Building & | Accumulated | Investment in Real | |||||||||||||||||||||||||||||||||||||||||||
Apartment Name | Location | Construction | Units (H) | Land | Fixtures | Land | Fixtures | Land | Fixtures (A) | Total (B) | Depreciation (C) | Estate, Net at 12/31/10 (B) | Encumbrances | |||||||||||||||||||||||||||||||||||
Woodlake (WA) |
Kirkland, WA | 1984 | 288 | 6,631,400 | 16,735,484 | | 2,745,189 | 6,631,400 | 19,480,673 | 26,112,073 | (9,005,733 | ) | 17,106,340 | (L | ) | |||||||||||||||||||||||||||||||||
ERPOP Wholly Owned Encumbered |
39,395 | 1,192,346,786 | 4,453,550,234 | | 370,524,330 | 1,192,346,786 | 4,824,074,564 | 6,016,421,350 | (1,346,626,508 | ) | 4,669,794,842 | 2,595,245,052 | ||||||||||||||||||||||||||||||||||||
ERPOP Partially Owned Unencumbered: |
||||||||||||||||||||||||||||||||||||||||||||||||
Butterfield Ranch |
Chino Hills, CA | (F) | | 15,617,709 | 4,512,495 | | | 15,617,709 | 4,512,495 | 20,130,204 | | 20,130,204 | | |||||||||||||||||||||||||||||||||||
Hudson Crossing II |
New York, NY | (F) | | 5,000,000 | | | | 5,000,000 | | 5,000,000 | | 5,000,000 | | |||||||||||||||||||||||||||||||||||
ERPOP Partially Owned Unencumbered |
| 20,617,709 | 4,512,495 | | | 20,617,709 | 4,512,495 | 25,130,204 | | 25,130,204 | | |||||||||||||||||||||||||||||||||||||
ERPOP Partially Owned Encumbered: |
||||||||||||||||||||||||||||||||||||||||||||||||
Brooklyner (fka 111 Lawrence) |
Brooklyn, NY (G) | 2010 | 490 | 40,099,922 | 217,648,526 | | (1,947 | ) | 40,099,922 | 217,646,579 | 257,746,501 | | 257,746,501 | 141,741,076 | ||||||||||||||||||||||||||||||||||
1401 South State (fka City Lofts) |
Chicago, IL | 2008 | 278 | 6,882,467 | 61,575,245 | | 53,017 | 6,882,467 | 61,628,262 | 68,510,729 | (5,846,831 | ) | 62,663,898 | 51,014,150 | ||||||||||||||||||||||||||||||||||
2300 Elliott |
Seattle, WA | 1992 | 92 | 796,800 | 7,173,725 | | 5,462,325 | 796,800 | 12,636,050 | 13,432,850 | (7,894,112 | ) | 5,538,738 | 6,833,000 | ||||||||||||||||||||||||||||||||||
Bellevue Meadows |
Bellevue, WA | 1983 | 180 | 4,507,100 | 12,574,814 | | 4,122,712 | 4,507,100 | 16,697,526 | 21,204,626 | (7,309,912 | ) | 13,894,714 | 16,538,000 | ||||||||||||||||||||||||||||||||||
Canyon Creek (CA) |
San Ramon, CA | 1984 | 268 | 5,425,000 | 18,812,121 | | 4,809,646 | 5,425,000 | 23,621,767 | 29,046,767 | (8,225,808 | ) | 20,820,959 | 28,000,000 | ||||||||||||||||||||||||||||||||||
Canyon Ridge |
San Diego, CA | 1989 | 162 | 4,869,448 | 11,955,064 | | 1,757,641 | 4,869,448 | 13,712,705 | 18,582,153 | (6,531,026 | ) | 12,051,127 | 15,165,000 | ||||||||||||||||||||||||||||||||||
Copper Creek |
Tempe, AZ | 1984 | 144 | 1,017,400 | 9,158,260 | | 1,846,036 | 1,017,400 | 11,004,296 | 12,021,696 | (5,587,555 | ) | 6,434,141 | 5,112,000 | ||||||||||||||||||||||||||||||||||
Country Oaks |
Agoura Hills, CA | 1985 | 256 | 6,105,000 | 29,561,865 | | 3,142,792 | 6,105,000 | 32,704,657 | 38,809,657 | (10,694,009 | ) | 28,115,648 | 29,412,000 | ||||||||||||||||||||||||||||||||||
EDS Dulles |
Herndon, VA | (F) | | 18,875,631 | | | | 18,875,631 | | 18,875,631 | | 18,875,631 | 18,342,242 | |||||||||||||||||||||||||||||||||||
Fox Ridge |
Englewood, CO | 1984 | 300 | 2,490,000 | 17,522,114 | | 3,394,463 | 2,490,000 | 20,916,577 | 23,406,577 | (8,158,317 | ) | 15,248,260 | 20,300,000 | ||||||||||||||||||||||||||||||||||
Lantern Cove |
Foster City, CA | 1985 | 232 | 6,945,000 | 23,332,206 | | 2,722,185 | 6,945,000 | 26,054,391 | 32,999,391 | (8,961,365 | ) | 24,038,026 | 36,403,000 | ||||||||||||||||||||||||||||||||||
Mesa Del Oso |
Albuquerque, NM | 1983 | 221 | 4,305,000 | 12,160,419 | | 1,556,306 | 4,305,000 | 13,716,725 | 18,021,725 | (5,210,415 | ) | 12,811,310 | 9,525,810 | ||||||||||||||||||||||||||||||||||
Montclair Metro |
Montclair, NJ | 2009 | 163 | 2,400,887 | 43,570,641 | | 2,092 | 2,400,887 | 43,572,733 | 45,973,620 | (2,218,030 | ) | 43,755,590 | 34,439,480 | ||||||||||||||||||||||||||||||||||
Monterra in Mill Creek |
Mill Creek, WA | 2003 | 139 | 2,800,000 | 13,255,123 | | 236,867 | 2,800,000 | 13,491,990 | 16,291,990 | (3,232,493 | ) | 13,059,497 | 7,286,000 | ||||||||||||||||||||||||||||||||||
Preserve at Briarcliff |
Atlanta, GA | 1994 | 182 | 6,370,000 | 17,766,322 | | 646,793 | 6,370,000 | 18,413,115 | 24,783,115 | (3,777,603 | ) | 21,005,512 | 6,000,000 | ||||||||||||||||||||||||||||||||||
Red Road Commons |
Miami, FL (G) | 2009 | 404 | 27,383,547 | 99,555,530 | | (2,216 | ) | 27,383,547 | 99,553,314 | 126,936,861 | (3,497,205 | ) | 123,439,656 | 74,150,144 | |||||||||||||||||||||||||||||||||
Rosecliff |
Quincy, MA | 1990 | 156 | 5,460,000 | 15,721,570 | | 1,453,717 | 5,460,000 | 17,175,287 | 22,635,287 | (6,797,434 | ) | 15,837,853 | 17,400,000 | ||||||||||||||||||||||||||||||||||
Schooner Bay I |
Foster City, CA | 1985 | 168 | 5,345,000 | 20,509,239 | | 3,191,061 | 5,345,000 | 23,700,300 | 29,045,300 | (7,741,356 | ) | 21,303,944 | 27,000,000 | ||||||||||||||||||||||||||||||||||
Schooner Bay II |
Foster City, CA | 1985 | 144 | 4,550,000 | 18,142,163 | | 2,985,085 | 4,550,000 | 21,127,248 | 25,677,248 | (6,970,045 | ) | 18,707,203 | 23,760,000 | ||||||||||||||||||||||||||||||||||
Scottsdale Meadows |
Scottsdale, AZ | 1984 | 168 | 1,512,000 | 11,423,349 | | 1,629,554 | 1,512,000 | 13,052,903 | 14,564,903 | (6,274,752 | ) | 8,290,151 | 9,100,000 | ||||||||||||||||||||||||||||||||||
Strayhorse at Arrowhead Ranch |
Glendale, AZ | 1998 | 136 | 4,400,000 | 12,968,002 | | 186,009 | 4,400,000 | 13,154,011 | 17,554,011 | (2,422,470 | ) | 15,131,541 | 7,971,429 | ||||||||||||||||||||||||||||||||||
Surrey Downs |
Bellevue, WA | 1986 | 122 | 3,057,100 | 7,848,618 | | 1,993,876 | 3,057,100 | 9,842,494 | 12,899,594 | (4,301,654 | ) | 8,597,940 | 9,829,000 | ||||||||||||||||||||||||||||||||||
Veridian (fka Silver Spring) |
Silver Spring, MD (G) | 2009 | 457 | 18,539,817 | 130,485,284 | | 18,886 | 18,539,817 | 130,504,170 | 149,043,987 | (6,908,776 | ) | 142,135,211 | 115,744,722 | ||||||||||||||||||||||||||||||||||
Virgil Square |
Los Angeles, CA | 1979 | 142 | 5,500,000 | 15,216,613 | | 1,334,954 | 5,500,000 | 16,551,567 | 22,051,567 | (3,992,519 | ) | 18,059,048 | 9,900,000 | ||||||||||||||||||||||||||||||||||
Willow Brook (CA) |
Pleasant Hill, CA | 1985 | 228 | 5,055,000 | 38,388,672 | | 1,857,343 | 5,055,000 | 40,246,015 | 45,301,015 | (10,264,218 | ) | 35,036,797 | 29,000,000 | ||||||||||||||||||||||||||||||||||
ERPOP Partially Owned Encumbered |
5,232 | 194,692,119 | 866,325,485 | | 44,399,197 | 194,692,119 | 910,724,682 | 1,105,416,801 | (142,817,905 | ) | 962,598,896 | 749,967,053 | ||||||||||||||||||||||||||||||||||||
Portfolio/Entity Encumbrances (1) |
1,417,683,780 | |||||||||||||||||||||||||||||||||||||||||||||||
Total Consolidated Investment in Real Estate |
124,866 | $ | 4,336,999,983 | $ | 13,999,852,420 | $ | | $ | 1,365,518,589 | $ | 4,336,999,983 | $ | 15,365,371,009 | $ | 19,702,370,992 | $ | (4,337,356,641 | ) | $ | 15,365,014,351 | $ | 4,762,895,885 | ||||||||||||||||||||||||||
(1) | See attached Encumbrances Reconciliation |
S-10
Table of Contents
ERP OPERATING LIMITED PARTNERSHIP
Schedule III Real Estate and Accumulated Depreciation
December 31, 2010
Schedule III Real Estate and Accumulated Depreciation
December 31, 2010
NOTES:
(A) | The balance of furniture & fixtures included in the total investment in real estate amount was $1,231,391,664 as of December 31, 2010. | |
(B) | The cost, net of accumulated depreciation, for Federal Income Tax purposes as of December 31, 2010 was approximately $11.1 billion. | |
(C) | The life to compute depreciation for building is 30 years, for building improvements ranges from 5 to 10 years, for furniture & fixtures and replacements is 5 years, and for in-place leases is the average remaining term of each respective lease. | |
(D) | This asset consists of various acquisition dates and largely represents furniture, fixtures and equipment, leasehold improvements and capitalized software costs owned by the Management Business, which are generally depreciated over periods ranging from 3 to 7 years. | |
(E) | Primarily represents capital expenditures for major maintenance and replacements incurred subsequent to each propertys acquisition date. | |
(F) | Represents land and/or construction-in-progress on projects either held for future development or projects currently under development. | |
(G) | A portion or all of these properties includes commercial space (retail, parking and/or office space). | |
(H) | Total properties and units exclude the Military Housing consisting of two properties and 4,738 units. | |
(I) | through (L) See Encumbrances Reconciliation schedule. | |
(M) | Boot property for Freddie Mac tax-exempt bond pool. |
S-11
Table of Contents
EXHIBIT INDEX
The exhibits listed below are filed as part of this report. References to exhibits or other filings
under the caption Location indicate that the exhibit or other filing has been filed, that the
indexed exhibit and the exhibit referred to are the same and that the exhibit referred to is
incorporated by reference. The Commission file number for our Exchange Act filings referenced below
is 0-24920.
Exhibit | Description | Location | ||
3.1
|
Sixth Amended and Restated Agreement of Limited Partnership for ERP Operating Limited Partnership dated as of March 12, 2009. | Included as Exhibit 10.1 to the Operating Partnerships Form 8-K dated March 12, 2009, filed on March 18, 2009. | ||
4.1
|
Indenture, dated October 1, 1994, between the Operating Partnership and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Indenture). | Included as Exhibit 4(a) to the Operating Partnerships Form S-3 filed on October 7, 1994. | ||
4.2
|
First Supplemental Indenture to Indenture, dated as of September 9, 2004. | Included as Exhibit 4.2 to the Operating Partnerships Form 8-K, filed on September 10, 2004. | ||
4.3
|
Second Supplemental Indenture to Indenture, dated as of August 23, 2006. | Included as Exhibit 4.1 to the Operating Partnerships Form 8-K dated August 16, 2006, filed on August 23, 2006. | ||
4.4
|
Third Supplemental Indenture to Indenture, dated as of June 4, 2007. | Included as Exhibit 4.1 to the Operating Partnerships Form 8-K dated May 30, 2007, filed on June 1, 2007. | ||
4.5
|
Terms Agreement regarding 6.95% Notes due March 2, 2011. | Included as Exhibit 1 to the Operating Partnerships Form 8-K, filed on March 2, 2001. | ||
4.6
|
Terms Agreement regarding 6.625% Notes due March 15, 2012. | Included as Exhibit 1 to the Operating Partnerships Form 8-K, filed on March 14, 2002. | ||
4.7
|
Form of 5.50% Note due October 1, 2012. | Included as Exhibit 4.2 to the Operating Partnerships Form 8-K dated May 30, 2007, filed on June 1, 2007. | ||
4.8
|
Form of 5.2% Note due April 1, 2013. | Included as Exhibit 4 to the Operating Partnerships Form 8-K, filed on March 19, 2003. | ||
4.9
|
Form of 5.25% Note due September 15, 2014. | Included as Exhibit 4.1 to the Operating Partnerships Form 8-K, filed on September 10, 2004. | ||
4.10
|
Terms Agreement regarding 6.63% (subsequently remarketed to a 6.584% fixed rate) Notes due April 13, 2015. | Included as Exhibit 1 to the Operating Partnerships Form 8-K, filed on April 13, 1998. | ||
4.11
|
Terms Agreement regarding 5.125% Notes due March 15, 2016. | Included as Exhibit 1.1 to the Operating Partnerships Form 8-K, filed on September 13, 2005. | ||
4.12
|
Form of 5.375% Note due August 1, 2016. | Included as Exhibit 4.1 to the Operating Partnerships Form 8-K dated January 11, 2006, filed on January 18, 2006. | ||
4.13
|
Form of 5.75% Note due June 15, 2017. | Included as Exhibit 4.3 to the Operating Partnerships Form 8-K dated May 30, 2007, filed on June 1, 2007. |
Table of Contents
Exhibit | Description | Location | ||
4.14
|
Terms Agreement regarding 7 1/8% Notes due October 15, 2017. | Included as Exhibit 1 to the Operating Partnerships Form 8-K, filed on October 9, 1997. | ||
4.15
|
Form of 4.75% Note due July 15, 2020. | Included as Exhibit 4.1 to the Operating Partnerships Form 8-K dated July 12, 2010, filed on July 15, 2010. | ||
4.16
|
Terms Agreement regarding 7.57% Notes due August 15, 2026. | Included as Exhibit 1 to the Operating Partnerships Form 8-K, filed on August 13, 1996. | ||
4.17
|
Form of 3.85% Exchangeable Senior Notes due August 15, 2026. | Included as Exhibit 4.2 to the Operating Partnerships Form 8-K dated August 16, 2006, filed on August 23, 2006. | ||
10.1*
|
Noncompetition Agreement (Zell). | Included as an exhibit to Equity Residentials Form S-11 Registration Statement, File No. 33-63158. | ||
10.2*
|
Noncompetition Agreement (Spector). | Included as an exhibit to Equity Residentials Form S-11 Registration Statement, File No. 33-63158. | ||
10.3*
|
Form of Noncompetition Agreement (other officers). | Included as an exhibit to Equity Residentials Form S-11 Registration Statement, File No. 33-63158. | ||
10.4
|
Revolving Credit Agreement dated as of February 28, 2007 among ERP Operating Limited Partnership, Bank of America, N.A., as administrative agent, JP Morgan Chase Bank, N.A., as syndication agent, Banc of America Securities LLC and J.P. Morgan Securities Inc., as joint lead arrangers and joint book runners, SunTrust Bank, Wachovia Bank, National Association, Wells Fargo Bank, N.A., LaSalle Bank National Association, The Royal Bank of Scotland plc, and US Bank National Association, as co-documentation agents, and a syndicate of other banks (the Credit Agreement). | Included as Exhibit 10.5 to Equity Residentials Form 10-K for the year ended December 31, 2010. | ||
10.5
|
Guaranty of Payment made as of February 28, 2007 between Equity Residential and Bank of America, N.A., as administrative agent for the banks party to the Credit Agreement. | Included as Exhibit 10.2 to the Operating Partnerships Form 8-K dated February 28, 2007, filed on March 5, 2007. | ||
10.6
|
Amendment to Revolving Credit Agreement. | Included as Exhibit 10.1 to Equity Residentials Form 10-Q for the quarterly period ended March 31, 2007. | ||
10.7
|
Credit Agreement dated as of October 5, 2007 among ERP Operating Limited Partnership, Bank of America, N.A., as administrative agent, JPMorgan Chase Bank, N.A., as syndication agent, Banc of America Securities LLC, as joint lead arranger and joint book runner, J.P. Morgan Securities Inc., as joint lead arranger and joint book runner, Citicorp North America Inc., Deutsche Bank Securities Inc., Regions Bank, The Royal Bank of Scotland plc, and U.S. Bank National Association, as documentation agents, and a syndicate of other banks (the Term Loan Agreement). | Included as Exhibit 10.8 to Equity Residentials Form 10-K for the year ended December 31, 2010. | ||
10.8
|
Guaranty of Payment made as of October 5, 2007 between Equity Residential and Bank of America, N.A., as administrative agent for the lenders party to the Term Loan Agreement. | Included as Exhibit 10.2 to the Operating Partnerships Form 8-K dated October 5, 2007, filed on October 11, 2007. |
Table of Contents
Exhibit | Description | Location | ||
10.9
|
Amended and Restated Limited Partnership Agreement of Lexford Properties, L.P. | Included as Exhibit 10.16 to Equity Residentials Form 10-K for the year ended December 31, 1999. | ||
10.10*
|
Equity Residential Second Restated 2002 Share Incentive Plan dated December 10, 2008. | Included as Exhibit 10.15 to Equity Residentials Form 10-K for the year ended December 31, 2008. | ||
10.11*
|
First Amendment to Second Restated 2002 Share Incentive Plan. | Included as Exhibit 10.1 to Equity Residentials Form 10-Q for the quarterly period ended September 30, 2010. | ||
10.12*
|
Equity Residential Amended and Restated 1993 Share Option and Share Award Plan. | Included as Exhibit 10.11 to Equity Residentials Form 10-K for the year ended December 31, 2001. | ||
10.13*
|
First Amendment to Equity Residential 1993 Share Option and Share Award Plan. | Included as Exhibit 10.1 to Equity Residentials Form 10-Q for the quarterly period ended June 30, 2003. | ||
10.14*
|
Second Amendment to Equity Residential 1993 Share Option and Share Award Plan. | Included as Exhibit 10.20 to Equity Residentials Form 10-K for the year ended December 31, 2006. | ||
10.15*
|
Third Amendment to Equity Residential 1993 Share Option and Share Award Plan. | Included as Exhibit 10.1 to Equity Residentials Form 10-Q for the quarterly period ended June 30, 2007. | ||
10.16*
|
Fourth Amendment to Equity Residential 1993 Share Option and Share Award Plan. | Included as Exhibit 10.2 to Equity Residentials Form 10-Q for the quarterly period ended September 30, 2008. | ||
10.17*
|
Fifth Amendment to Equity Residential 1993 Share Option and Share Award Plan dated December 10, 2008. | Included as Exhibit 10.21 to Equity Residentials Form 10-K for the year ended December 31, 2008. | ||
10.18*
|
Form of Change in Control Agreement between Equity Residential and other executive officers. | Included as Exhibit 10.13 to Equity Residentials Form 10-K for the year ended December 31, 2001. | ||
10.19*
|
Form of First Amendment to Amended and Restated Change in Control/Severance Agreement with each executive officer. | Included as Exhibit 10.1 to Equity Residentials Form 10-Q for the quarterly period ended March 31, 2009. | ||
10.20*
|
Form of Indemnification Agreement between Equity Residential and each trustee and executive officer. | Included as Exhibit 10.18 to Equity Residentials Form 10-K for the year ended December 31, 2003. | ||
10.21*
|
Form of Letter Agreement between Equity Residential and each of David J. Neithercut, Frederick C. Tuomi, Alan W. George and Bruce C. Strohm. | Included as Exhibit 10.3 to Equity Residentials Form 10-Q for the quarterly period ended September 30, 2008. | ||
10.22*
|
Form of Executive Retirement Benefits Agreement. | Included as Exhibit 10.24 to Equity Residentials Form 10-K for the year ended December 31, 2006. | ||
10.23*
|
Retirement Benefits Agreement between Samuel Zell and Equity Residential dated October 18, 2001. | Included as Exhibit 10.18 to Equity Residentials Form 10-K for the year ended December 31, 2001. | ||
10.24*
|
Amended and Restated Deferred Compensation Agreement between Equity Residential and Gerald A. Spector dated January 1, 2002. | Included as Exhibit 10.17 to Equity Residentials Form 10-K for the year ended December 31, 2001. | ||
10.25*
|
Change in Control Agreement dated as of March 13, 2009 by and between Equity Residential and Mark J. Parrell, Executive Vice President and Chief Financial Officer. | Included as Exhibit 10.2 to the Operating Partnerships Form 8-K dated March 12, 2009, filed on March 18, 2009. | ||
10.26*
|
Summary of Changes to Trustee Compensation. | Included as Exhibit 10.1 to the Operating Partnerships Form 8-K dated September 21, 2005, filed on September 27, 2005. |
Table of Contents
Exhibit | Description | Location | ||
10.27*
|
The Equity Residential Supplemental Executive Retirement Plan as Amended and Restated effective November 1, 2008. | Included as Exhibit 10.4 to Equity Residentials Form 10-Q for the quarterly period ended September 30, 2008. | ||
10.28*
|
Amendment to the Equity Residential Supplemental Executive Retirement Plan. | Included as Exhibit 10.1 to Equity Residentials Form 10-Q for the quarterly period ended June 30, 2010. | ||
10.29*
|
The Equity Residential Grandfathered Supplemental Executive Retirement Plan as Amended and Restated effective January 1, 2005. | Included as Exhibit 10.2 to Equity Residentials Form 10-Q for the quarterly period ended March 31, 2008. | ||
10.30
|
Amended and Restated Sales Agency Financing Agreement, dated February 3, 2011, among the Company, the Operating Partnership and Merrill Lynch, Pierce, Fenner & Smith Incorporated. | Included as Exhibit 1.1 to the Operating Partnerships Form 8-K dated and filed on February 3, 2011. | ||
10.31
|
Sales Agency Financing Agreement, dated February 3, 2011, among the Company, the Operating Partnership and BNY Mellon Capital Markets, LLC. | Included as Exhibit 1.2 to the Operating Partnerships Form 8-K dated and filed on February 3, 2011. | ||
10.32
|
Amended and Restated Sales Agency Financing Agreement, dated February 3, 2011, among the Company, the Operating Partnership and J.P. Morgan Securities LLC. | Included as Exhibit 1.3 to the Operating Partnerships Form 8-K dated and filed on February 3, 2011. | ||
10.33
|
Amended and Restated Sales Agency Financing Agreement, dated February 3, 2011, among the Company, the Operating Partnership and Morgan Stanley & Co. Incorporated. | Included as Exhibit 1.4 to the Operating Partnerships Form 8-K dated and filed on February 3, 2011. | ||
12
|
Computation of Ratio of Earnings to Combined Fixed Charges. | Attached herein. | ||
21
|
List of Subsidiaries of ERP Operating Limited Partnership. | Attached herein. | ||
23.1
|
Consent of Ernst & Young LLP. | Attached herein. | ||
24
|
Power of Attorney. | See the signature page to this report. | ||
31.1
|
Certification of David J. Neithercut, Chief Executive Officer of Registrants General Partner. | Attached herein. | ||
31.2
|
Certification of Mark J. Parrell, Chief Financial Officer of Registrants General Partner. | Attached herein. | ||
32.1
|
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of David J. Neithercut, Chief Executive Officer of Registrants General Partner. | Attached herein. | ||
32.2
|
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Mark J. Parrell, Chief Financial Officer of Registrants General Partner. | Attached herein. |
* | Management contracts and compensatory plans or arrangements filed as exhibits to this report are identified by an asterisk. |